Archive for the ‘short sale’ Category
Monday, April 5th, 2010
As of today, the short sale process is streamlined. However, it remains to be seen how seamless the changeover will be for lenders.
The Home Affordable Foreclosure Alternatives (HAFA) program provides the following incentives.
- $3,000 to borrowers for relocation assistance
- $1,500 to servicers for administrative and processing costs
- Up to $2,000 to investors who allow up to $6,000 in short sale proceeds to be distributed to subordinate lien holders
HAFA also provides a big protection for participating sellers: “Requires borrowers to be fully released from future liability for the first mortgage debt and, if the subordinate lien holders receives an incentive under HAFA, those debt as well (no cash contribution, promissory note, or deficiency judgment is allowed).”
The National Association of Realtors reports that borrowers will have to meet certain criteria to qualify for this program.
- “Principal residence. The property may be vacant up to 90 days before the date of the Short Sale Agreement (SAA), Alternative Request for Approval of Short Sale, or DIL (deed in lieu of foreclosure) but only if the borrower documents they were required to relocate at least 100 miles from their home for purposes of employment and they have not purchased another property in the 90 day period.”
- “First lien originated before 2009″
- “Mortgage delinquent or default is reasonably foreseeable”
- “Unpaid principal balance no more than $729,750 (higher limits for two- to four-unit dwellings)”
- “Borrower’s total monthly payment exceeds 31% of gross income”
HAFA’s goal is to prevent underwater properties from going into foreclosure.
The National Association of Realtors (NAR) produced the following materials for consumers.
The US Treasury Department also released its own guidelines for the program.
DHW asks: Do you think HAFA will successfully streamline the short sale process?
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Tags: brochure, guidelines, HAFA, nar, short sale, streamline, treasury, webinar
Posted in HAFA, Home Affordable Foreclosure Alternatives, short sale, treasury, underwater, webinar | 1 Comment »
Sunday, February 28th, 2010
Negotiating a short sale does not end at the price. Increasingly, more lenders are requiring sellers to pay back some of the loss absorbed in a short sale. Before signing a short sale agreement, sellers should take notice of any mention of a required payback. Lenders may consider removing such language if pushed back by the borrower. It’s still in the lender’s best interest to accept a short sale now than go through the expense of a foreclosure later.
DHW asks: Have you successfully sold your home as a short sale? If so, did you sign a promissory note for any part of the loss absorbed by the lender?
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Posted in negotiating a short sale, short sale, short sales | 1 Comment »
Monday, December 14th, 2009
The National Association of Realtors released guidelines for the new Home Affordable Foreclosure Alternatives (HAFA) program. The government’s program is designed to streamline the short sale process for qualifying homeowners.
DHW asks: Have you sold your home as a short sale? If so, how was your experience?
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Tags: guidelines, HAFA, Home Affordable Foreclosure Alternatives, realtors, short sale
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Sunday, December 6th, 2009
The Wall Street Journal published an insightful op-ed piece by Edward Pinto. Mr Pinto sees two major shortfalls with the Treasury’s attempt to modify delinquent mortgages through the Home Affordable Modification Program (HAMP).
- “The first shortfall is that the program doesn’t provide a clear process to triage the over 7.5 million delinquent loans.”
- “It doesn’t take into account that the primary reason borrowers default is “negative equity.” When a house is worth less than what is owed on it, making monthly payments seems like a waste of money and many homeowners walk away.”
Mr. Pinto categorizes the three types of delinquent borrowers in his article:
- Borrowers with loans for vacation homes or investors. Pinto feels these loans should be identified immediately and, “when necessary, foreclosed on.” ‘Scammers’ also fall into this category.
- Borrowers who can’t or won’t pay their mortgage. Mr. Pinto feels these borrowers should be given incentives to vacate their homes, “either a small amount of cash or the ability to conduct a short sale.”
- Borrowers who have demonstrated an ability and willingness to pay their mortgage. Mr. Pinto writes that these borrowers can be best served “if we stop clogging the system with unqualified borrowers from groups one and two.”
(If you fall into category three, still call your lender for a loan modification using HAMP. With government pressure now on the industry to act quickly, you may find your lender to be more cooperative than in the past. If you fall into category two, contact your lender to request a short sale or deed-in-lieu of foreclosure.)
In October 2008, along with Peter Wallison, Edward Pinto wrote in the Wall Street Journal that government agencies bore a responsibility to “clean up the mess they had made by lowering underwriting standards to satisfy Congress’s desire to increase home ownership.” They suggested “that the loan principal could be reduced by an average of 20% to give owners equity—and with it an incentive to pay their mortgages.” They also suggested that mortgages “be modified to a 5% fixed rate loan with a 20-year term.”
DHW highly recommends that you read this article (this includes you too, Treasury).
DHW asks: Have you applied for a loan modification or short sale? If so, how was your experience?
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Tags: edward pinto, HAMP, home affordable modification program, Housing, loan modification, short sale, treasury, wall street journal
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Tuesday, December 1st, 2009
Finally, relief for those seeking a loan modification, short sale or deed-in-lieu of foreclosure. Lets hope these will be the game changers we’ve been waiting for.
- Update for those seeking a loan modification using Making Home Affordable (a.k.a. HAMP)
- New guidelines for streamlining short sales and deed-in-lieu of foreclosures (HAFA)
This information is also available under “Modification Center”
DHW asks: Do you think these programs will be game changers?
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Monday, October 26th, 2009
There are two must-have guides for homeowners and real estate agents pursuing a VA compromise sale (commonly referred to as a ‘VA short sale’):
The first is written for real estate professionals and homeowners; the second for servicers (i.e. your mortgage lender).
Important facts to remember when negotiating an offer:
- After you have a fully executed contract, your lender will order a VA appraisal. VA will not approve the sale if the net proceeds are less than 88% of the new appraised value. Remember this when negotiating the price.
- For a compromise sale, VA discourages the seller from paying costs that are customarily paid by the buyer. You should have a strong argument ready for your lender if the contract reflects these expenses. VA may still approve these costs if the lender nets at least 88% of the appraised value.
- Don’t believe your lender if they tell you a customary seller’s expense is not approved by VA. (This is where the Servicer Loss Mitigation Program guide comes in handy. See the bottom of page 28 with regard to allowable costs.) This fact cannot be stressed enough: VA does not have a sanctioned list of “allowable” and “non-allowable” closing costs. If your lender uses this tactic to deny authorizing customary expenses, push back. Do not be afraid to call VA for backup (1-800-933-5499 or 1-800-319-9446). The VA is far more reasonable than your lender will have you believe.
DHW asks: Have you completed or attempted a VA compromise sale? How was your experience?
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Tags: allowable closing costs, buyer's closing costs, closing costs, Compromise sale, Department of Veterans Affairs, Housing, housing news, lender, loss mitigation, Real Estate, real estate news, seller's closing costs, short sale, VA, VA approved costs, VA approved expenses, VA compromise program, VA compromise sale, VA short sale
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