Short Sale Chronicles – HEMAP and Short Sales

Real Estate Broker/Owner with RE/MAX Home Experts

There is nothing new to those of us that list short sales about being surprised, right? I mean, we can have all of our documentation signed, get a quick offer, package it up neatly and BAM! Get surprising news that affects our success.



I was recently processing a short sale along with a few others I was working on and I had a pretty good feeling it would work out in the end. Let me state that we initially were trying to sell it without the need of a short sale, but the subsequent offers changed that approach.


So after compiling all of the paperwork and information, we tried initiating the sale in Equator (an online system some lenders use to facilitate a short sale and the process). Our attempts were thwarted stating the file already has been initiated. After conversing with my seller, it appeared the short sale lender initiated it in an attempt to process a deed in lieu. Nonetheless, it took about 2 weeks to straighten out and eventually the property was released to me in the system. I proceed to enter all of the information only waiting on title. I typically order title immediately, but this moved so fast we didn’t have the report back in time. Upon receiving the report I noticed a 2nd mortgage on the property that the seller did not mention. It actually seemed strange to me, as it was an open-end mortgage.


After investigating, it was a PHFA HEMAP loan to the borrower to help the borrower catch up on past due mortgage payments. The borrower (seller) thought it was government help and did not understand it was a lien against the property. Of course, not only will the property sell less than the 1st mortgage, now we have to get the 1st lien holder to accept a payout to the 2nd lien holder (PHFA).  Ultimately, since I am already in the middle of submitting for 1st lien approval, I submit with a total payoff of the 2nd.  Don’t you know the 1st lien holder counters at a higher price and removes the pay out to the 2nd???  So what to do now?  I am attempting to process a reduced payoff to PHFA for the HEMAP loan. I mean, the likelihood they will see any money at all is slim (should it go to sheriff sale). Apparently the HEMAP program shockingly (sarcasm) is no longer accepting applications and has run out of funds. Which leads me to this million dollar question: How does the government expect the average person to be financially responsible when they can’t?  Talk about a lack of leading by example.


If anyone has experience with a short sale involving a PHFA HEMAP, I’d love to hear about it. To be continued…


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Rick Frissell
HomeXpress Realty - Valrico, FL
aka "The Red Baron of Real Estate"

I have found that whenever the government is involved, I am thankful we still have the right to bear arms.  I just don't know when it will be one short sale too many :-)

Jan 23, 2012 11:19 AM #1
Adam Goldman

Just as a point of clarification, HEMAP didn't run out of funds due to any bungling by PHFA. It had its funding cut by the state in a last minute budget deal between the Corbett administration and republican leadership in the general assembly. Their budget had included (I believe) $8 million for the program, while Corbett's completely cut its funding. They negotiated to give it $2 million, which was only enough to cover some of the loans it had already promised, so PHFA was forced to shutter the program.

Jan 24, 2012 01:39 AM #2
Hannah Williams
Re/Max Eastern inc. - Philadelphia, PA
Expertise NE Philadelphia & Bucks 215-953-8818

John  This is a sorry state of affairs for everyone involved. Makes me so sad to hear of all these short sales .I am also sorry to hear HEMAP ran out of money as they were a big help to those in need .

Good Luck and keep us up to date


Jan 24, 2012 06:13 AM #3
John Benson
RE/MAX Home Experts - Philadelphia, PA
Broker/Owner - Philadelphia Real Estate

@ Adam - I think programs such as HEMAP, while with good intentions, have instances where the allocated funds do not make much sense. Example: A loan issued that is more than 25% of the total remaining balance just to get a borrower caught up on mortgage payments (particularly if the two loans total over the appraised value) seems destined to fail. That seems as irresponsible as some of the no doc loans fom the height of the boom.

Jan 24, 2012 10:10 AM #4
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John Benson

Broker/Owner - Philadelphia Real Estate
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