I feel compelled to reblog Katerina Gasset's post about HAFA in regard to short sales. Just last week I found out a colleague of my husband is coming back to live in the USA. They choose to work with another real estate company and had been looking at short sales. Colleague was having a discussion with my husband who is a licensed Realtor about how short sales were not going to be a problem for them.
They have a house to sell in the UK which works in a different way to us. Their Realtor had told them they did not need to worry about their home sale contingency it was not going to be an issue with a short sale. (Assumming he even knows how sales work in the UK-this is clearly bad advice) He also told them that come April they could make an offer on any short sale home and under the new HAFA rules they would automatically get an answer from any lender in 45 days.
My husband politely told them they need to be sure that they are being told the right truthes because he was sure they were not. I hope they read this because I know they read my blog. Guys Katerina is an expert on short sales in Florida and has published this about the HAFA program so consumers can be better educated. Feel free to show your Realtor.
Let's Get To The Truth About HAFA- The New Short Sale Guidelines
Active Rain and the internet has seen a surge in posts and articles written by agents and the media regarding the new HAFA program; the streamlining short sales program rolled out by the U.S. Treasury Department.
Many of these posts were featured. Many of them rang strong with hope for a faster closing time. I will be writing a set of articles along with this one that will go over all of the points in the 43 pages of guidelines and forms. There is just too much to put in one post.
Whenever I see a group of people complaining and wanting something to be changed I want to take a step back to see the big picture.
One sentence comes to mind often, " Be careful what you ask for."
NAR, Realtors® and homeowners around the country shouted, petitioned, discussed, wrote and spoke to their representatives about how long short sales take and how the banks don't seem willing to do them and that they don't know what they are doing.
My first question is:
Who says that a professional small business in Real Estate was going to be a walk in the park? And what makes a business where there is no ceiling, low entry level and can create success beyond one's wildest dreams also expected to be easy. Real estate is one of the highest stress careers but you can have a big pay day.
My second question is:
How many agents that wrote these posts of the blissful future of short sales actually read all 43 pages of the guidelines and forms?
I was tempted to write about HAFA but decided that I better understand HAFA and form an opinion based on facts- the facts that are written in these guidelines. So I spent 8 hours yesterday studying these guidelines and speaking with attorneys about them to get their opinions.
On the NAR website under the HAFA section it states:
"HAFA is a complex program, with 43 pages of guidelines and forms, designed to simplify and streamline use of short sales and deeds-in-lieu of forecloxure."
Do you see the oxymoron? How do you place the words, COMPLEX and SIMPLIFY in the same sentence?
The first rumor that I want to dispell is that all the short sales are now going to go smoothly. That is NOT the case.
These guidelines are complicated to say the least, there are a lot of ifs, ands and buts going on here.
The second rumor that I want to dispell is that all short sale lenders will have to answer your request for a short sale within 10 days.
This is NOT the case ALL the time and in ALL situations.
These guidelines are NOT for Fannie and Freddie owned loans. Fannie Mae and Freddie Mac will be coming out with their own set of guidelines in the coming weeks.
The guidelines only pertain to servicers who are in the HAMP program now or those who enroll in the HAMP program.
Servicers must offer the HAMP program first before they offer the HAFA program.
The HAFA program is only for:
- Principal Residences
- First mortgages
- The mortgage is delinquent or will be delinquent in the foreseeable future.
- The unpaid balance is less than $729,750.
- The monthly mortgage payment is more than 31 percent of the borrower's gross income.
The third rumor that I want to dispell is that this is going to happen right now. NOT TRUE.
This program begins on April 5, 2010 and servicers have until December 31st of this year to opt in to the program.
However, servicers may opt to begin the program at any time before April 5, 2010 as long as they can implement a record keeping system.
The fourth rumor that I want to dispell is that all the lenders are now under these guidelines.
The HAFA program is not LAW. The US Treasury rolled out these guidelines to go along with the HAMP program.
This part really gets me!
"The Treasury has selected Freddie Mac to serve as its' compliance agent for HAFA."
You mean the same Freddie Mac that was involved with the huge accounting and fraud scandals?
According to the Chicago Tribune Freddie Mac executives "devised a plan to use accounting tricks to mislead shareholders about outsize profits the government-chartered firm was then reaping from risky investments. The goal was to push earnings onto the books in future years, ensuring that Freddie Mac would appear profitable on paper for years to come and helping maximize annual bonuses for company brass."
We believe in adding value to our sellers. We are good at negotiating short sales. Short sales are much more about good negotiating skills than anything else and programs like these tend to tie our hands in applying our negotiation skills.
We will take longer short sale times with approvals any day over shorter short sale response times that come back with a Rejection mark on them in order to fulfil their accoutability time frames.
We close 98% of ALL of our short sale listings and other agents do also. If we can do it, then you can too. If you are not closing above 80% of your short sale listings than you need to learn negotiating skills. Negotiating skills is what brings value to your clients and your business. Stay tuned for more details on the HAFA guidelines and forms- consider subscribing to our blog to be alerted of new articles.
Contact Nestor and Katerina Gasset today at 561-753-0135-Don't Lose Your Home To Foreclosure!
Find out more about Florida Short Sales by clicking here.No registration required.
Let's Get To The Truth About HAFA- The New Short Sale Guidelines- Rumors Vs Facts- Copyrighted © by Katerina Gasset *2009* All Rights Reserved.
Corinne Guest
Realtor & Managing Broker
Royal Advocate Realty, Barrington
Call today 847-363-3686 for real estate and relocation service.
Suburban Real Estate - Lake Zurich, Hawthorn Woods, Kildeer, Long Grove
Corinne- Thank you so much for a reblog of this article. This post is so important because people all over are under the wrong impression.
I know that there are title issues in the UK, the chain of title is also done differently there. I hope he gets an agent in the UK who knows and understand not just the short sale process but all the things a notary there would usually handle as well as the legalities with lien releases. And also, in the UK are the lenders going to forgive his debt or negotiate some sort of resolve? I know a bit about UK - and I know first hand of cases where at the closing table because of a decline in value, the buyer rebids on the property at an even lower amount than he started with and they can do that in the UK. I know of 3 times, the buyer has done that on non short sales there. But then what would the bank say and does the buyer even understand that this could make him lose the house. Katerina
I should have said his sale in the UK will not affect a short sale purchase here. They want to make an offer on a short sale listing in Barrington subject to a contingency home sale in the UK. They are not in trouble in the UK.
In the UK offers are verbal, mortgage funding is approved, home inspections are carried out and appraisals. At that point the lawyers will "Exchange Contracts". It is only at that point are you "Under contract" Thereafter it takes 14 days to 45 on average to "Complete" the transaction.
Of course if the short sale listing here has even a half knowledgable Realtor in relation to a short sale they are going to wave their head side to side not up and down.
We are perplexed why these guys chose another Realtor. They went back to the old company to find their original agent but she had left and so they ended up with some-one out of area who they do not even know and it appears has little knowledge of short sales. Sadly the office did not connect them with the original agent who in fact was the broker at the time and has opened her own office much like us. I would gladly have passed this information to them had we known they really wanted to use her.
I hope they get what they want and do not end up in trouble. Likely our basement will become their home for a while if it gets messed up.