Archive for the ‘Foreclosure’ Category

Here is the conclusion to the new HAFA regulations that goes into effect on 4/5/2010. HAFA prohibits the servicers from requiring the consumer to carry on any future liability for any uncollected debt arising from the short sale of a consumers property (NO cash contribution, NO promissory note or NO deficiency judgment is allowed). HAFA also makes the servicers use a standard process, documents, timeframes and deadlines. The regulation also provides financial incentives that go like this: $1500 will be given for borrower relocation assistance, $1000 to cover the administrative and processing costs to the servicer, $1000 to the investors for giving any subordinate lien holders up to $3000 (in other words the servicer is to give the 2nd mortgage holder up to $3000 to forgive their note on the property) the government will pay the servicer on a one dollar for three dollar matching basis. Here is the big one: The Home Affordable Foreclosure Alternatives Program requires all servicers who are, or were, participating in HAMP to implement HAFA in accordance with their own guidelines and investor policy. It can include language for potential loss, local markets, timing of pending foreclosures, and borrower cooperation and motivation. What is the bottom line? This program is drastically changing the way that servicers are allowed to disperse property. The servicer must try to keep the borrower in the property. If that can’t be done and all options have been exhausted then a Short Sale is the next step, where the servicer must take on the liability of the loss. Foreclosure is the LAST resort. The program is in effect until 12/31/12. If you are a real estate agent, you had better be ready for the onslaught of Short Sales. In my next blog I will let you know where you can get help to close your Short Sales faster.

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I have been asked a number of times in the last two weeks what HAFA is, what are the new guidelines, and how will the legislation affect the way that we buy and sell real estate? The acronym stands for Home Affordable Foreclosure Alternatives Program. It is slated to be put into effect on April 5th 2010. It is a mammoth 43 page document that details all of the new guidelines that banks, who took TARP money are going to be required to follow. I am going to give an overview of the changes. First, it will work in conjunction with HAMP (Home Affordable Modification Program) by working with the existing HAMP financial hardship documentation already collected. Second, it also gives a viable alternative to consumers that are eligible for HAMP but can’t afford the modification. Third, it allows borrowers to receive preapproved short sale terms before the property is listed. Fourth, it also prohibits the servicer from lowering a Realtors commission that is agreed on the listing agreement, up to 6%. Fifth, it releases the borrower from any liability by the servicer. NO cash contribution, deficiency judgment, or promissory note is allowed. I will conclude my examination of the new HAFA guidelines in the next weeks Blog.

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