More and more details of the federal government’s efforts to standardize and streamline the mortgage modification and short sale process were released as the media digests the information. The name is “Home Affordable Foreclosure Alternatives Program” (HAFA).
Here’s the bottom line: the banks wrote HAFA. Who do you think will benefit from it? Paperwork and documents are meaningless, except for the government. The point is that once a homeowner commits to the HAFA process, the mortgage servicer owns them. Whatever the servicer decides is the mortgage deficiency will be the final outcome. Having been to two Realtor meetings designed to explain HAFA, I can tell you that no Realtor will want any part of this. Looks easy, but it’s a trap; and they know it.
Since the revealing of HAFA, I can’t find one happy customer or realtor in dealing with this mess. Mortgage servicers will use every trick in the book to resist assuming responsibility for the huge loss of value to residential real estate in the country today. This includes expediting short sales.
Key points are:
Servicers participating in HAMP are also required to comply with HAFA.
HAFA applies to loans not owned or guaranteed by Fannie Mae or Freddie Mac. They will issue their own versions of HAFA very shortly.
Short sales and deeds-in-lieu of foreclosure are basically synonymous. But short sale benefits mortgage investor and deed-in-lieu benefits servicer. Where do you think that’ll lead?
More information to understand about HAFA:
-Uses the same borrower financial and hardship information already collected in connection with consideration of a loan modification.
-borrowers will be allowed to receive pre-approved short sale terms before listing the property (this includes the minimum acceptable net proceeds).
-Prohibits the servicers from requiring a reduction in the real estate commission agreed upon in the listing agreement (up to 6%). You think this will motivate and encouraged a few previously discouraged realtors?
-Requires borrowers to be fully released from future liability for the first mortgage debt (no cash contribution, promissory note, or deficiency judgment is allowed). This is huge.
-Requires standard timeframes and deadlines.
-Provides financial incentives: $1,500 for borrower relocation assistance; up to $1,000 for investors; allowing a total of up to $3,000 in short sale proceeds to be distributed to subordinate lien holders (to be on a one-for-three matching basis).
The program does not take effect until April 5, 2010. Servicers may implement it before then if they meet certain requirements. The program is set to end on December 31, 2012. As mortgage modification firms like the ones I represent, who also facilitate short sales, submit these standardized application files, the pressure on lenders and servicers will very quickly become intense.
The REST Report title search guarantees the same timelines and negates any treachery by the mortgage servicer. Score one for the homeowner. A real estate/short sale investor will be a much better negotiator for sttelemt terms in a short sale than the servicer who doesn’t have any ‘skin in the game.’
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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 do it yourself loan modification. But if your reduced income is too low, short sale versus 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. If you have assignment of title issues or need to calculate net present value, you may have a cloud on your title which can block the short sale rules. This blog is a resource to evaluate short sale vs. foreclosure. 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
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Originally posted 2009-12-18 00:31:14. Republished by Blog Post Promoter
{ 8 comments… read them below or add one }
How does a bankrupcy proceding influence a short sale? Does the bankrupcy need to complete before a short sale?
Thanks for writing. BK depends on Ch 7 or Ch 13. I believe Ch 13 can be itemized ( separate short sale) but maybe not. Ch 7 assuredly not.
If I were you, I’d consult a BK attorney.
I can just about guarantee that short sale and debt settlement is better than a BK. Like 98% of the time.
Streamlining the HAFA Short Sale negotiation process – http://www.mortgage-mod-monster.com/?p=375
Wow, greet post !
How do I find a trustworthy tax accountant and financial advisor in my area?
I would suggest someone who has passed the IRS Tax Accountant classes.
I received a letter from AHMSI, my loan servicer, indicating I may qualify for the HAFA program, but to take “advantage of the opportunity I need to contact them by X date or you will lose your one and only opportunity to participate in HAFA.” Can the servicer limit my ability to participate in this program in this way? I know the program is scheduled to run through 2012 — shouldn’t the borrower be allowed to apply for the program anytime within the programs timeframe?
Your servicer wants your home for free. HAFA dictates the terms of your short sale and you have no choice. It is a trap. No one that I can find has ever been satisfied with HAFA.