Posts Tagged ‘treasury’

It’s official! Short sale process streamlined

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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Posted in HAFA, Home Affordable Foreclosure Alternatives, short sale, treasury, underwater, webinar | 1 Comment »

Op-Ed: Treasury should modify loan modifications

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).

  1. “The first shortfall is that the program doesn’t provide a clear process to triage the over 7.5 million delinquent loans.”
  2. “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:

  1. 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.
  2. 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.”
  3. 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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Posted in HAMP, Housing, home affordable modification program, loan modification, making home affordable, short sale | No Comments »

Treasury Dept says ‘no deal’ for Fannie

Saturday, November 7th, 2009

Citing a loss too great for taxpayers, the US Treasury Department blocked Fannie Mae’s nearly $3 billion sale of unused low-income housing tax credits to Goldman Sachs Group and Berksire Hathaway.

DHW asks: Do you agree with the Treasury’s decision?

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Posted in Housing Article, berkshire hathaway, fannie mae, goldman sachs, housing tax credits, treasury | No Comments »

Fannie Mae strikes deal to sell $2.6 billion in unused tax credits

Thursday, November 5th, 2009

In a deal that still needs Treasury Department approval, government run Fannie Mae reached an agreement with unnamed buyers to sell approximately $2.6 billion in unused low-income housing tax credits. The Treasury Department said it would approve the sale “if it was clearly in the interest of taxpayers.”

DHW asks: Do you think this deal is in the best interest of taxpayers?

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Posted in Housing Article, fannie mae, housing tax credits | No Comments »