Accurate, easy-to-understand articles are difficult to come by when describing effects of the new Home Affordable Foreclosure Assistance (HAFA) legislation. The financial mortgage industry has been alive with accounts of the that officially takes effect April 4 of 2010. This linked article is excellent. The one ommission they make is to not refer to the legislation by name, or the initials HAFA.
Briefly, once the distressed homeowner sign the HAFA commitment letter, there is no escape. You will sell your house to whatever buyer your lender chooses, at whatever price they choose, and you will move.
The legislation was written by the banks and benefits them only. Realtors and distressed homeowners who have completed the HAFA process are aghast at the iron-fisted treatment that HAFA deals out.
There is no allowance for an experienced investor to make a discounted cash offer and negotiate the mortgage deficiency that would be a result. The banks would rather lose any chance of efficient resolution to the non=performing asset than allow an investor to make any money, whether it benefits the distressed homeowner or not.
These guidelines specify a ten day deadline on banks responding to a short-sale application from a distressed homeowner. What’s missing is the fine print that states the short sale package must be absolutely complete before the ten day clock starts. As inefficient as the banks are at organizing mortgage modification files, one can only imagine how many files have been ignored or lost if the figures don’t align with the Net Present Value calculations that they have.
Don’t kid yourself, the financial incentives for short sale applications have the same effect that incentives have for mortgage modifications; absolutely zero. It has been proven over and over that the mortgage loan servicers make more money on a foreclosure than a mortgage modification or a short sale. It’s all about the money, folks. Capitalism has no conscience unless it is enforced.
The solution that benefits the distressed homeowner again will be getting the REST Report. The REST Report calculates Net Present Value for a short sale just as it does for a mortgage modification. The homeowner is given figures so that an investor can negotiate the best deal for the homeowner and investor. We are seeing spectacular results in the courts when homeowners present the REST Report as part of a foreclosure defense. This means the homeowner can hold the lender accountable for good faith negotiations in their short sale, or mortgage modification.
While it is rare that lenders insist that buyers share in the principal loss of a short sale, this will be forbidden in the new guidelines. The REST Report holds the mortgage investor totally responsible for principal value loss.
If the distressed homeowner has a mortgage with a small, local bank or credit union, they may be better off trying to modify their mortgage or short sale directly.
The HAFA guidelines are for conventional lenders. The release of Fannie Mae and Freddie Mac guidelines are imminent and assuredly will duplicate HAFA. I have not seen a favorable review of the HAFA anywhere, from anyone, since the release of the Home Affordable Foreclosure Assistance guidelines.
Mortgage modification and short sale applications are essentially identical.
I published the complete guidelines under ‘Short Sale 101′ on this blog.
I can’t end this post without mentioning one more time how much better a negotiated short sale is than foreclosure or bankruptcy. The effects of foreclosure or bankruptcy are devastating for years to come on credit reports and credit availability. With a short sale, you can lease-option another house for two years, repair your credit, and own again in two years.
How may I help?
Powered by Fast Secure Contact Form
I read every comment. Please use the Comment box below and tell me what you think.
The internet being what it is, certain search terms need to be empahasized so that you can find the best information. Obviously this page concerns short sale, short sale rules, and foreclosure alternatives. But other concerns such as try title, quiet title, and clear title may apply. The REST Report is best classified as loan modification software or mortgage modification software. It is used to establish chain of title and assignment of title. But if your reduced income is too low, short sale versus foreclosure or short sale foreclosure is the goal. The REST Report claim to fame is that you use it to calculate Net Present Value exactly the way the banks do, using their software. It is the answer for a real estate title search to decide if your mortgage servicer has the right to foreclose on you at all. This blog is dedicated to independant mortgage advice. You may have a cloud on your title which can block the sale of yourhouse. There is no excuse for foreclosure other than the treachery of your mortgage servicer.
This YouTube video explains the Broken Chain of Title, short sale, cloud on title situation
Read it here
tags: short sale vs foreclosure, short sale foreclosure,short sale, calculate net present value,
loan modification software,mortgage modification software,foreclosure alternatives,rest report,chain of title,real estate title search,independent mortgage advice,assignment of title,short sale rules,
Originally posted 2010-01-13 21:22:26. Republished by Blog Post Promoter
{ 1 comment… read it below or add one }
Home Affordable Foreclosure Assistance Treachery defined again – http://t.co/JirHoREf
{ 1 trackback }