Some Folks Get Excited About Birthdays, Others Await April 5th

Many people get so excited about birthdays. I never do. My twenty-first birthday came and went years ago and ever since then, a birthday is just another day for me. I pray that my family and my staff will not do anything for my birthday. It just makes me feel awkward and embarrassed. Who wants to get older anyway?

Now, while I could care less about my birthday, I am a little bit excited about April 5^th, 2010. That's the day that the HAFA program is supposed to take effect. Under our government's HAFA program, the Treasury will provide incentives to servicers that provide short sales and deeds-in-lieu of foreclosures to borrowers who do not qualify for a loan modification through the Home Affordable Modification Program (HAMP). Additionally, sellers who participate in a short sale (which is supposed to have a more streamlined approval process) will receive a $1500 incentive at closing.

The latest concern that has been discussed in the news is a concern about short sale fraud. Designers of the HAFA program are concerned that there may be some borrower fraud in connection with this program which requires that the seller and the buyer are participating in an arm's length transaction.

My experience with the HAMP program and my significant contact with servicers across the nation makes me curious and eager for April 5^th. While all ideas brought to the table up until now have been good, putting those ideas into practice at the bank level and bringing them to the public has proven to be challenging. After all, President Obama originally stated last March that the HAMP program would provide modifications for 4 million people nationwide. Yet the program had only provided 116,000 completed modifications as of January 2010.

My second large concern is with regard to short sale negotiations between first and second lien holders. People who have already studied the program know that only participating servicers (who are on a list) will be following the HAFA guidelines which call for no deficiency judgments and a maximum of $3000 to second lien holders. I'm curious as to how the short sale will play out when the second lien holder is not a HAFA participant. Will it make negotiating easier or will we be facing a brick wall?

If you are unfamiliar with the HAFA program, you can read more about it here. I'm more eager for April 5^th than I am for my own birthday-curious about the gifts and new challenges it might bring to the table. I'm not expecting a cake, just some answers.