This could be great news to help stem the large amount of foreclosures we have been seeing!
Fresh off the presses....new information for you that reinforces our belief that the Obama Administration is about to open the flood gates for short sales.
In other words, as we have been advocating for well over 3 years now...and as many of you will agree...
Short Sales are THE solution!
Here is what we have just learned:
Seth Wheeler, Senior Advisor to the Treasury Department discussing the Obama Administration’s Home Affordable Modification Program, (which isn’t working at the level needed or intended) indicated that the Obama Administration may be shifting focus from modifications to another program which simply gets troubled borrowers out of their homes as quickly and cleanly as possible.
In other words, Short Sales are the solution.
Wheeler, “Short sales, deeds in lieu are other ways to prevent foreclosures to help achieve stability [in housing],” “Modifications are only for a certain subset of distressed homeowners.” Translation: not many want to mod their loans or can mod their loans.
As you will recall last November the Treasury launched the Home Affordable Foreclosure Alternatives program which specifically targets short sales and deeds in lieu of foreclosure.
So, here is how it works….’troubled borrowers’ are sent to the HAMP program first. In other words, the first thing the lenders will do is offer mortgage loan modification. Next, if the borrower can’t or won’t do a loan mod…then…they are directed to the HAFA program. Here is an overview of this process: (Note: expect changes to this program)
Servicers must consider HAMP eligible borrowers for HAFA within 30 calendar days of the date the borrower:
- Does not qualify for a Trial Period Plan;
- Does not successfully complete a Trial Period Plan;
- Is delinquent on a HAMP modification by missing at least two consecutive payments; or
- Requests a short sale or DIL. This last point is interesting. You need to be aware that when your client calls their lender and the lender attempts to ‘force’ them to their loan mod department under these new guidelines the borrower can request to go directly to the short sale department. Kind-a confusing but, you get the idea.
Here is what you need to know about HAFA. Remember, the video that we created for you last year about HAFA is HERE.
- The HAFA program offers incentives in this program “upon successful completion of the short sale” or Deed in Lieu.
- Borrower receives relocation assistance of $1500. Yep, seller/ borrower will receive $1500 for doing the short sale. Oh, how things are about to change!...but, it gets better....
- Servicer incentive of $1000 to cover administrative and processing costs and investor reimbursement of $1000 for subordinate lien releases. That’s when the investor allows up to $3000 in short sale proceeds to go to subordinate lien holders.
- Participating lenders can NOT pursue a deficiency judgment post short sale (or DIL) closing. This will be the end to all the mickey-mouse lenders try to get borrowers to agree to post closing. Like, paybacks.
- Commissions....6%, thank you very much!
Bottom line, expect the HAFA program to be front and center starting this April once the new guidelines are in full effect. Its our believe that these new guidelines will usher in what we have been advocating for years…the streamlined short sale! Agents, 2010 IS the year of the short sale. Watch the FREE Harris Real Estate University Agent Short Sale Secrets CDPD video and download the FREE BOOK NOW!
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