WASHINGTON – Dec. 1, 2009 – The Obama Administration, through the Treasury Department, announced new housing guidelines yesterday. While a series of announcements highlighted different programs, the National Association of Realtors (NAR) focused on changes that will make it easier for real estate associates to deal with short sales and “deeds in lieu of foreclosure.”
The program’s official name is the Home Affordable Foreclosure Alternatives Program (HAFA), and it’s part of an existing initiative, the Home Affordable Modification Program (HAMP). HAFA applies to loans not owned or guaranteed by Fannie Mae or Freddie Mac, which cover over half of all U.S. mortgages; however, Fannie and Freddie will issue their own versions of HAFA in coming weeks.
While HAFA’s goal is simple – increase the number of short sales and “deeds in lieu of foreclosure” by simplifying the process – the rules are complex, and it comes with 43 pages of guidelines and forms. Among other things, HAFA:
• Allows borrowers to receive pre-approved short sales terms before listing the property (including the minimum acceptable net proceeds).
• Prohibits servicers from requiring a reduction in the real estate commission agreed upon in the listing agreement (up to 6 percent).
• Requires borrowers to be fully released from future liability for the first mortgage debt (no cash contribution, promissory note, or deficiency judgment is allowed.)
• Provides financial incentives: $1,500 for borrower relocation assistance; $1,000 for servicers to cover administrative and processing costs; and up to $1,000 for investors.
The program does not take effect until April 5, 2010, but servicers may implement it before then if they meet certain requirements. The program sunsets on Dec. 31, 2012.
For more information, read the Nov. 30 HAMP news release: https://www.hmpadmin.com/portal/docs/news/hampupdate113009.pdf
To read the complete 43-page short sale guidelines, go to: https://www.hmpadmin.com/portal/docs/hamp_servicer/sd0909.pdf
How do you think this information will affect your business? (And by the way, it WILL affect your business whether or not you’re even doing short sales yet…) Please post your response below and I’ll provide some feedback once I hear from you.
7 responses so far ↓
1 Bob H // Dec 3, 2009 at 12:14 am
Better question is, Shawn how do you think this will affect the business?
Bob
2 Shaun // Dec 3, 2009 at 3:24 pm
Well now… isn’t that the easy way out!
Actually, I’ll happily give my opinion but I would like to see what others think before posting my opinion. So what do you think guys and gals?
3 Darlene S. // Dec 4, 2009 at 3:02 pm
What about the 2nd lien on a short sale? Does it get wiped out? Also, the speed of approval from the lenders. I have a short sale facing foreclosure because the lender has not approved an August short sale package and the lender has lost 2 documents previously submitted. I’m afraid the banks have control and are not heeding new w.h. rulings.
4 Hollywood // Jan 2, 2010 at 7:58 am
Does this mean the home owner can still receive up to $1K (for buying something) and an additional $1.5K for moving assistance? The bank will recieve $1K and we as investors will recieve an additional $1K for doing the short sale?
With the home owner fully realeased of all liability that should pretty much make it a no brainer even for the stubborn ones who now have no excuses not to SS the home!
Honey, pack your cloth were going on vacation now instead of march!
5 Michele G // Jan 5, 2010 at 12:23 am
The only think I wish is that the property did not have to be a primary residence. I am an investor renting a property that is so upside down and would love to take advantage of a program like this for me.
6 Frank G // Jan 11, 2010 at 7:17 am
Not investor friendly because you have to be a licensed real estate agent to make a commission or obtain proceeds on the transaction .
7 Nathan // Feb 4, 2010 at 1:04 pm
Shawn,
After reading the full 34 pages I found that a buyer must agree to not resell the house for 90 day!
That will have a huge negative effective on my business.
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