New HAFA Program May Not Help Homeowners Facing Hardship--I recently became Certified in the National Association of Realtor"s (NAR) course for Short Sales (SFR) Short Sale and Foreclosure Resource and also the California Association of Realtor's (CAR) HAFA Certification.
Home Affordable Modification Program--came into being in 2009 and has over 100 of the largest Banks participating. It is designed to help Homeowners stay in their home through a process of modifying their loan based on income while experiencing some hardship financial or otherwise. Home Affordable Foreclosure Alternative (HAFA) is an extension of HAMP and is designed to provide the homeowner with an alternative to foreclosure if they cannot qualify for a modification of their loan.
The Guidelines for the HAFA Program are complex and extensive. It is not really the complexity of the Program, however what will matter. It is the Application of HAFA that will count. I provided an overview of the program recently on a post on ActiveRain. R eading the Guidelines and the application of the Guidelines are two different things, however. How the Banks decide to implement this new program is where the "rubber meets the road" so to speak.
The Documents for the HAFA Short Sale are the Short Sale Agreement (SSA), Request Approval Short Sale (RASS) and the Alternative Request Approval Short Sale (ARASS). When you review these documents, you realize that yet again we have a Government Program that will help very few homeowners.
There are two factors that negate the HAFA Program. One, that the Lender determines the Net Basis they will accept. This could be a huge road block. As it was explained in the course, the bank will take a look at the cost of foreclosing and the cost of doing a short sale to determine which would be best for the Lender. Interesting terminology. Somewhere what's best for the homeowners remains lost. I have grave concerns on how this will play out. The way I currently get all my short sales approved is by astutely knowing market value and pricing the property to move it and get the highest price possible for the seller and the Lender.
Secondly the homeowner must continue to make payments throughout the entire process. Most short sale clients that I deal with do not have the resources even when they still have income to relocate and still make payments. There is an incentive for the homeowner of $3000 for relocation costs, however most people know that if you are in financial trouble to begin with then $3000 for relocation falls short.
Early on when I first heard about HAFA, I predicted that it would be a program more designed for the 
Lenders than for the homeowner and my prediction at this early stage seems to be accurate.
*****READ CAREFULLY****HARD CORE REALITY HERE******
I've recently taken two short sale listings where the homeowners where in the process of doing HAMP loan modifications. Once you qualify, HAMP allows for a 3 month trial payment plan and if you make all those payments on time then your loan becomes finalized at the new terms.
One would assume that the Lender has approved the homeowner prior to putting them in a trial program. In both cases these homeowners were dragged into five months of this trial period with a continual request for more documentation and encouragement that they would be approved. At the end of the five month period both loan modifications were denied and a demand placed on the homeowner to repay the reduced amount for all five month within 3 days. When both clients said they could not do so, they were told to do a short sale.
In both cases, these clients could have managed to continue their payments, however once they stopped paying the higher amount and accrued this large balance, they were unable to come current.
*****
It always becomes important to try to put things in context with the bigger picture. There is growing concern about the Banks and how they operate. We've all become aware of the Goldman Sachs Fiasco and how Indymac Bank, the FDIC and One West Bank have managed to swindle any number of homeowners out of their homes while making an extraordinary amount of money at every turn of the SCAM. These things don't just happen...they are PLANNED! The Goldman Sachs video is a must watch. I don't believe it stops here and as time moves on, we will know more and more. WA MU and the latest info on their planned mortgage scam is a new example. Another video that is a must watch is Salvador Russo's YouTube Video and his perspective on the Central Bank. He provides us with what is a reality few know or are ready to accept and encourages us to blog about our experiences. We have a responsibility on a grass roots level to spread the word of what is happening in our local markets and areas. I blog to help the Consumer and my market know what has occurred; what is taking place on a National level; and what options are available to them for their welfare and well being.
I have clients who were in a Indymac loan and tried unsuccessfully to modify their loan for 18 months while being coerced constantly to make payments and that their loan modification would be approved. They are now letting their home go to foreclosure and relocating to the East Coast. Finding the video on the Indymac and Goldman Sachs debacle helped them finally see what they were up against and that they would never prevail. It can only be likened to a Con Game or Scam of major proportions.
On a lighter note:
Two recent events are interesting in my dealings with short sales. After my determination that I would most likely not be using the HAFA Program to help my clients, I received a call from a prospective short sale client who does want to use HAFA. He wants to continue his payments until the sale is completed and then relocate to his new job. He is already pre-approved with Wells Fargo for an FHA loan to purchase in his new area. Wells Fargo advised him to do the HAFA Short Sale and that there would be a much less hit to his credit allowing him to purchase immediately in the new location. So....application is always everything and only two days after completing the HAFA Certification, I receive a call from someone who wants to use HAFA for his short sale.
My second example is on a traditional short sale with Bank of America where they have countered us with asking the Seller to come to the table with $5,000 and sign a promissory note for $15,000. She is a single woman and cannot afford to do this. It will take all her resources to find a new rental and move. She will barely be able to scrape by even when she gets out from under the mortgage (stated income on two people's income rather than just her income). Well, after much stressing on my part about this and after taking the HAFA Certification, I decided to turn in an ARASS form (HAFA's Alternative Request Approval Short Sale). This is how you apply for a HAFA approval if you already have the Buyer and probably the way I will choose to use HAFA. If they will accept the HAFA ARASS and herein lies the question of all questions (ARE THE BANKS GOING TO HONOR THIS PROGRAM AND THE INTENTION THEREIN) it could help us out of a no win situation. The results could be that she get $3000 for relocation and a clean approval (without that promissory note and the $5000 at closing). We don't yet know the outcome but I've already found two opportunities to try new measures to protect my clients with HAFA.
The real importance of all this is knowing and understanding the ramifications of these programs so that we can help our clients. I personally don't think HAFA will prove any better than the HAMP Program.
I am seeing that HAMP Program being used to hurt the Consumer. I still have hope for HAFA and only time will tell.
New HAFA Program May Not Help Homeowners Facing Hardship--I have taken extensive training and continue to do so in order to help Sellers facing hardship. We have new Government Programs that you need to know about. Call today to learn more about your options. I hope with Government Oversight we may see a changing trend with the banks actually doing loan modifications and short sales over foreclosures.
I am Jeanean Gendron your Redding and Shasta County Specialist.
You can reach me at 530 276-7417. I answer my phone.
I am HAFA Certified.
All Active SHORT SALE Listings
All Active FORECLOSURE Listings
Redding and Shasta County Real Estate Resource
How Much Is My Home Worth ~ Search all Homes in Shasta County ~ Dream Home Finder
Search for Schools in Redding and Shasta County
Visit my main real estate website that provides you with the ability to Search the MLS and to set up an account so that you can save searches and select favorite properties. I also have many saved searches for you to take advantage of. There are saved City Searches and Community Searches. We also save Foreclosure Listings and Short Sale Listings.
Visit and learn more about The Shasta Lifestyle and the experience of living here in Shasta County.
Here are my blog sites:
Northern California Properties
California Properties and Land
Comments(5)