Hamp and Hafa Programs-UPDATES NOW ADDED 4/30

Hamp and Hafa ProgramsI've reviewed much of the Hamp and Hafa Programs and honestly, it seems tough to use it if the homeowner has a 2nd lien(2nd Mtg) on the home, or has already moved out, or is unemployed.

These 3 very REAL reasons occur in a majority of the short sales I've witnessed or have been involved with. Nonetheless, I’ve posted this information because there are those that MAY benefit and I wouldn’t throw any program out the door without reviewing the specifics of your sellers NEEDS!!

Now, little about "Hamp", this program is for loan modifications and generally involves the maximum payment of 31% of the sellers total income before taxes to be paid towards your loan. Once these numbers are established, proof of ability must be supported and then there is a 3 month test period to see how able the owner is to pay, dosnt work if unemployed, and it dosnt work in many cases. But, again, I would’nt throw anything away without review against their particular needs.

If the Loan modification fails or if an application to skip the loan modification is requested and accepted, then you can move right into a Hafa short sale program.

HAFA:The Good:

1-Homeowners will be released of all responsibility with a satisfaction of lien from the lender.(This is excellent,(many short sales may still hold owners liable for the deficient amount that the lender lost)

2-There is a "pre-aproved" short sale Listing along with the Minimum sales value. (Saves time, easier for buyers to buy!!!-The pre-aprovals are done in 10 days-YAY

3-Homeowners are given $3000.00 towards relocation from the lender at closing.( An excellent aide to families moving to their new home)

4-If the homeowner had attempted a Hamp Modification, then all the same docs and info will be used, no repetitive docs.-( This saves time!)

HAFA: The Bad:

1-The property can't be sold to a relative, friend or anyone with a close relationship to the seller.Must be an ARMS LENGHTH transaction, therefor a 90 day period must occer before an investor may re-sell.

2- The buyer may not re-sell the property for less than 90 days after closing. Nor can they rent the home back to the previous owner.

3-The difference between the remaining amount of principal you owe and the amount they receive from the sale must be reported to the Internal Revenue Service (IRS) on Form 1099C, as debt forgiveness. In some cases, debt forgiveness could be taxed as income. The amount paid to you for moving expenses ($3000) may also be reported as income. It is suggested that they contact the IRS or their tax preparer to determine if you may have any tax liability.I understand the 1099 will be issued.

4-If you have a real estate license you can’t earn a commission by listing your own property

5- The seller must also be able to deliver marketable title free of any other Jr. liens. They will allow up to three percent (6%) of the unpaid principal balance of each subordinate lien, in order of priority, not to exceed $6,000 in aggregate for all subordinate liens, to be deducted from the sale proceeds to pay subordinate lien holders to release their liens. They require each subordinate lien holder to release you from personal liability for the loans in order for the sale to qualify for this program.

****If the Jr. Liens agree to the HAFA short sale, then they are required to release the sellers from any and all liability. These negotiations will probably be left up to US, the REALTORS. It may be difficult to do and many 2ndary lenders will not accept this, every case is different), most will laffffff

6-The seller must live "IN" and maintain the property, HOA dues and or maintenance fee's. The seller will, in most cases be making payments up to a total of 31% of his gross monthly income

In the end, these programs may help some people… but it’s going to take a savvy realtor to help make it happen!!

Regards!!-- HOPE THIS IS HELPFULL!!!!!

Rose Mencia, Broker

Sundance Realty South Florida, Inc., 1926 Hollywood Blvd. suite 212, Hollywood, Fl. 33020 cell: 786-208--6804

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  • I've done a pretty good breakdown of the HAFA program as well. Personally, I don't think the lenders will comply with it, and I also think it doesn't address MI approval/issues, and doesn't leave enough room and flexibility for junior liens.

    To answer your question Rose, if they don't accept it, our commission IS up for negotiation, and the sellers can kiss that $3,000 "incentive" goodbye!

    We have a good active HAFA discussion group also:
    HAFA Short Sale Program
    This is a group to discuss the HAFA (Home Affordable Foreclosure Alternatives) Program, which is to streamline the short sale process.
  • CONGRATS!!!!lolol.. this business is getting tougher and tougher......we should all have doctorates by the time this "bubble" cools off.>>>What I wonder is..."what if the jr. lien dosnt accept the $3k max." then what??>>> This always seems to be where so much time is lost..... I need to look into whether the 2nd MUST comply at 3k or not..will post it as soon as I find out---- Thanks!
  • Rose, I had a second this past week that insisted on 10% ($6700) The first would only give them $1000. After I sent the HAFA to the first, they actually increased the pay off to the second to $3,000! I don't know if they were unaware of HAFA or if they were hoping I didn't know about HAFA.
  • lolol... something good may come out of Hafa....Its just not very obvious at this point! Does seem like a big,encumbering mess!!!! I don't think I'll be into it much,many of my short sales are 2nd homes at this point....
    I wrote this little" report" because I yearn for the days when i could go "door-knocking" for listing leads.... the last 5 yrs have been spent reading and updating and reading,reading....... I'm back in college again.... yuck...well,.
    Maybe others could get some info w/out so much digging and pain....lolol.....
    Take Care!
  • Rose, excellent summary of the program.
    As for HAMP, by the end of February there were only about 170,000 permanent modifications done while the administration was hoping for a total of 3 - 3,5 million by 2012. So in my opinion it is a huge fiasco. By the way, do we already have the number for March or is it too embarrassing to announce?
    Also I have seen many cases when the homeowner was put on a trial period only to be denied the modification after several months of trial payments.

    HAFA - good program for recourse states and 1st lens. In non-recourse states it will largely depend on specific laws that can be different from state to state. As you said subordinate liens are going to be a huge problem. Well... let's wait and see how it plays out. Also, the implementation is the key. I can only hope that this will truly be a streamlined, standardized, relatively short process.
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