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HAFA-the Good, the Bad, and the Ugly

By
Real Estate Agent with Texas Landmark Properties

One of the best westerns of all time can help us put things in perspcetive.   Here are the major points that Short Sale Teams like mine are going to be facing with these new guidelines.

 

The Good

The main goal of the program is to shorten the time line and get homeowners straight answers from their Lenders.

Borrowers and their Lenders are being incentivized through the program.

New standard forms are being promised to help speed the process.

Preapproved short sale terms are supposed to aid Realtors in marketing to buyers who want a quicker turn around and who want definite terms and conditions of sale.

The specific rules governing hardship to be expanded to include the potential loss of value on the mortgage and conditions of the local market.

Realtors will not have to negotiate with the lender for their commissions as long as the amount does not exceed 6%.

 

The Bad

 

Adding more paperwork and more steps to the Short Sale process is likely to create more confusion for the loss mitigation dept already undermanned and overwhelmed.  The 10 day turnaround window opportunity doesn't even begin until a very new complicated process is completed.

Homeowners must now first apply for the Hamp Program and be turned down before they can be allowed to participate in the Hafa Program.  This adds more time and more steps to the process of a homeowner that most often is already in the process of losing their home to foreclosure.

The incentive program to Homeowners ($1500 at closing for a broom swept clean property) has had a dismal record for this program for those properties already begun with the program.  Almost all moneys are eaten up with various misc costs associated with Short Sales which the lender requires on the HUD1.

As to the preapproved terms for the Short Sale, there appears to be little or no change in the use of the BPO process of determining a quick value. However, by attempting to price a property before the Listing Price is allowed to determine a true fair market value,  there is the potential to ignore specific issues which in the past could result in lowering the value in the homeowners' favor. 

 The program is anticipated to affect millions of homeowners, however it does not include at  this time any loans  with Fannie Mae or Freddie Mac.  

The Hafa Program isn't mandatory.  It isn't law and to date has no consequences, (other than losing the paltry incentive package)  if the Lender chooses to ignore various features. The Lenders can choose to follow the guidelines or not.   There is no regulatory board in place to appeal decisions.

The Ugly

Commissions are not protected.  The language does seem to protect the original agreement for  a commission not to exceed 6%, but a special provision inserted gives the Lender the privilege to deduct from the commission a Vendor fee if needed.  And so far on existing transactions for many Realtors under this program, it has been gobbled up to the tune of 1-1.5%.

 

More ugly.  Added to the new standard Short Sales Agreement form is this little beauty.. 

 Notice To Borrower:  Be advised that by signing this document you understand than any documents and information you submit to your sevicer in connection with the Making Home Affordable Program are under penalty of perjury.  Any misstatement of material fact made in completion of these documents including but not limited to misstatements regarding your occupancy in your home, hardship circumstances, and/or income, expenses, or assets will subject you to potential criminal investigation and prosecution for the following crimes: perjury, false statements, mail fraud, and wire fraud.  (italics mine.)

 So get ready for April 5th.  It appears to be a brand new day in real estate when you could be sending a Client off to meet a criminal investigator when they thought they were simply signing some papers trying to avoid a foreclosure.  I hope the REO Realtors realize that more properties are coming their way because policy boards and lawyers have jumped into the water.

Mary Jo Thomas
Solutions Real Estate - Phoenix, AZ

Hi RC, Thank you for the information.   Let's hope that this will work better than in the past for all concerned.

Mar 29, 2010 01:50 AM
Jenna Dixon
Momentum Real Estate Group LLC - Marietta, GA
55 & Over | New Constructions | Horse Farms

Whew!  More misery.  By the time you DO NOT QUALIFY for HAMP, it will likely be too late for HAFA.

Part of the plan or just a HAPPY coincidence?  You decide.

Mar 29, 2010 02:05 AM
RC Cutcher
Texas Landmark Properties - Round Rock, TX

Mary Jo,

There are some things that could help!  Getting a net price early on should help  those Realtors who can't seem to get the hang of lowering their listing price into the BPO range.  However, if the FMV doesn't reflect the most recent low values or the specific property issues....we are still in a fight to convince the lender to let go.

 

Jenna,

What are we to do with homeowners who are caught in a hardship (like divorce or death) and HAMP (loan modification) makes no sense whatsover?........  just Wasted Days and Wasted Nights.  Bring back the Freddie Fender song! 

RC Cutcher
Realtor, ABR
512-848-4449
Texas Landmark Properties
11109 Dodge Cattle Drive
Austin, Tx 78717

www.RCshortsale.com

RC_Cutcher@Helloworld.com

The Short Sale/Foreclosure Workshop--MCE--3HRS
Course No. 03-00-100-7436  TREC Provider No. 0623

Broker Price Opinion Training--MCE--2HRS
Course No. 02-00-031-7967  TREC Provider No. 0623

Mar 29, 2010 08:05 AM
Jenna Dixon
Momentum Real Estate Group LLC - Marietta, GA
55 & Over | New Constructions | Horse Farms

I like "freedom is just another word for nothin' left to lose"  Janice Joplin, I think...

Mar 29, 2010 09:49 AM
RC Cutcher
Texas Landmark Properties - Round Rock, TX

So here comes the government today.  God help us all with trying to explain how things have to get more complicated in order to make it simple to work.

Apr 05, 2010 03:08 AM