HAFA- Defining The Details- Part II
Since I wrote the post, Let's Get To The Truth About HAFA- The New Short Sale Guidelines- there have been more questions raised. Like I said in that post we will take these HAFA guidelines apart so that you will be able to understand how this is going to help or not in your short sales.
The HAFA program is an acronym for Home Affordable Foreclosure Alternatives- Short Sale and Deed-In-Lieu of Foreclosure. It is known in the industry as the Supplemental Directive 09-09.
Let's continue with the analysis of HAFA:
The most important thing to understand about this directive- the HAFA program is that is provides, guidance to servicers for first mortgages that are NOT guaranteed by Fannie Mae or Freddie Mac.
The word that you need to pay attention to in this sentence is that these are guidelines. This is not the law. These are not really even policies or rules. Guidance is a suggestion not a must do.
Servicers are the companies that you pay your mortgage to. Most people pay their mortgages to servicing companies and not the company that owns the note on your mortgage. This is confusing sometimes since the names of your servicers are names of banks. So you could be making your mortgage payments to Chase but Chase is just the servicer and your note may actually be owned by Wells Fargo. So you will not negotiate directly with Wells Fargo- Chase will do that part. It could be the other way around also. This is because your note is sold to other companies and sometimes your note could be sold to many different companies throughout the term of your note. I wrote an article that goes into detail about the servicers in this featured post about loan modifcations and short sales getting turned down by the servicers.
- All servicers that opt into the HAFA program must sign a SPA agreement with Fannie Mae in behalf of the United States. This SPA agreement is the same type of agreement as a PSA agreement.
- The servicers get to decide the extent to which they want to work with short sales and these guidelines don't have to take effect until April 5, 2010 although the servicers who are in HAMP can move your file into HAFA before that date.
- Your loan must be HAMP eligible and meet other requirements in the guidelines in order to be eligible for the incentives to you and to your servicer.
That is an explanation of just the first page of the HAFA guidelines.
There are servicers who are already starting to use the HAFA program. The problem is that the servicers are already making mistakes in using this program.
Case In Point-
We have a short sale listing that is with Chase. We did not get to use our regular negotiator at Chase on this file. The negotiator we did have sat on his tush with this file and did not work on it. Then after 30 days of waiting without a BPO order, the negotiator it was assigned to sent it back to us along with a whole set of HAMP paperwork!
HAMP is the loan modification program that is a joke. Anyways- our seller does not qualify for the HAMP program on this property because it is an investment property. The homeowner does not live in the house and thus is not eligable for HAMP or HAFA. All the negotiator had to do was look at the file we sent in to see that this is an investment property and saved us all time. Now we are going to have to teach this negotiator how to use the HAFA program since they don't know how.
If the property you are doing a short sale on is not your principle residence you are not quailified for HAFA but you may still be able to get a short sale approved through normal short sale channels.
Don't get over excited about the 10 days that you read about everywhere. That ten days is NOT from the beginning of the process to the end. We will go into those details in the next post in this series on HAFA.
There are some positive things for the homeowner and those are:
- you will get up to $1500 to help you with moving expenses from the servicer upon a successful closing,
- the first note holder has to remove any deficiency and can not puruse a deficiency. This does not pertain to second mortgages or HELOCs.
We will continue through all 43 pages of these guidelines section by section- the sections that are important to homeowners and short sale agents.
For more information about Florida Short Sales- click here.
To view Florida Short Sales- Click here. We know Palm Beach County Short Sales and Port St Lucie Florida Short Sales and will help you get your home Sold if you need to Sell your home and help you buy your home in Palm Beach County Florida: Call us today.
Short Sales and HAFA- Defining The Details for Real Estate Agents and Homeowners-was first published on South- Florida-Luxury-Living.com.
Copyright © 2009 By Katerina Gasset, All Rights Reserved.*Short Sales and HAFA- Defining The Details For Real Estate Agents and Homeowners.*
Please read the first post I wrote on the HAFA program so you can understand and follow along in the entire series we are doing. Thanks. The link to that post is in the first line of this post. Katerina
Katerina, the series are very informative, clearly written and easy to understand.
Katerina,
Another very informative blog, that I was waiting for. I read the first one, and found it to be very helpful.
I see the word used twice already, Katerina, but these are amazingly informative posts. Your clients are lucky to have you.
Katerina -
Great post. About a not so great program. Too little-too late.
A lot like the new law regarding credit cards and interest rates.
The horse is already out of the barn.
Katerina - Thank you for laying this out. We've just had so much industry changes. All in all, it's a good thing that the government is trying to put in Checks and Balances for us.
Great, Great info. Thanks for sharing this info. We just got back from a Short Sale class in Ohio this week where they were going over briefly info such as this.
I scanned through the 43 pages when it came out, however, I have not had a chance to sit down and analyze it line by line. Thank you for doing it for us and I look forward to your next post on HAFA!!
Thanks for the information, I am going to read the first one now.
Informative post. Thanks for taking the time to put this out there. Many people mistake "guidelines" for laws or mandated rules when they hear to gov't put it out. All we can do is wait and hope. Maybe banks will start and others will follow.
IMO It should not take small incentives from the gov't to get the banks to move on short sales. The dollar loss should speak for itself. ie; I heard CW evaluated a block of their sold REO's (on properties where the short sale offers were denied) and found that they $35 million on the table. What kind of investor/bank doesnt understand basic math?
Thank you for your indepth analysis. It was truely refreshing. I look forward to following it. I see so many well meaning people that take something they hear in passing and run with it in a post terrifying the rest of the real estate community. I do short sales, have been a realtor/broker for 28 years and it's the hardest work I've ever done. But it's also the most rewarding. We need correct information, not opinions or rumor stated as fact. You're the real deal. Thanks again. Karen Hewitt Realty Connection AZ
This is a good series and good things to know. I look forward to the rest of it.
What a great and useful topic, thank you for your analysis. I'm muddling thru the new "guidelines" to see the changes.
Jeff Burnham, Rosen & CO, Las Vegas, NV
Thank you Katerina for taking the time to explain this thoroughly. I've got a headache coming on just by reading this short post. Wow, only 42 more pages to go!
Hi Katerina, It is obvious you put an incredible amount of time into this post. Thanks from all of us !
You might as well skip to the end - $3,000 to the second lien holder to estinguish the debt that he holds is not going to happen! The process of the first and second lienholders negotiating a fair settlement for both parties is what is required. The second lien was usually granted based upon equity in the home when the loan was granted. The first was granted based on the creditworthyness of the customer. Many responsible homeowners are underwater and still paying their mortgages. Therefore, it follows that the primary lien holder should suffer in the losses even more than the second lien holder. But that's just a personal opinion.
Thanks for amplifying and clarifying the programs. I thought I understood the programs until I read your posts and explanations. Thanks.
Thank you for taking the time to educate all of us on these very important changes. Your efforts are appreciated!
Thanks for the info on HAFA. This kind of clarification is what EVERYONE needs!
Katarina, you rock girl! Thanks for this, I am re-blogging them too and have sent a couple agents in my office the info as well.
Hi everyone! Thank for all your comments. I will address questions in the series. I will also expand on what we have experienced that we think will be the case.
We have been in a CRS module all day- the new NAR Short Sale Designation. Sometimes we have to join them, LOL! I will get back on track and then do the next series at the beginning of the week. Thanks for following this series and please pass it a long to your colleagues and brokers.
Thanks Katerina! What a rat's nest! I will be waiting for part 2!
Thanks and thanks. The SFR class I sat through gave a chart of 'eligibilty criteria overview for home affordable refinance' which I thought was a part of HAFA. It states the existing mortgage must be owned or backed by Fannie Mae or Freddie Mac. I have to go back over all this again because I see you say at the top of your post that HAFA is for those first mortgages NOT guaranteed by Fred or Fan.
Just trying to learn and understand so I can make sure I'm helping my clients out the best I can.
Bev and Bob- HAFA is NOT used for Freddie and Fannie loans.
A part of the warped thinking of government once again, they say they want to come up with a uniform set of guidelines for short sales yet then in the next breath they say that Freddie and Fannie are going to come up with their own guidelines! What a joke! So how does HAFA become a uniformed program?
Remember, important- this is voluntary. Only HAMP optins are required to also do HAFA but this is all about the 1sts. 2nds do not HAVE to comply. Thus, another wrench thrown into the mix. Katerina
Thanks for taking the time to decipher and send this along. I'll be looking forward to the future posts.
Do we know what banks have opted in yet? Will there be a list to know who has and who hasn't?
why is it the banks who took our hard erned taxed dollars we pay to the govt it the form of TARP money and then these banks screw with us by setting on our short sales, iwth out even looking to notice that it is 2nd home and does not qualify for HAFA
I really hope your posts help in some overly optimistic expectations I've been coming across...
Katerina, it's good to read the series together. There is so much conflicting information out there, it's great to have a reliable source such as yourself.