Be bold enough to ask?

I know for many of you reading this blog, you may suspect me to be some crazed wacko blogging away in his underpants in his mothers basement but, that image is far from the truth. When reading what I have to write, just keep an open mind and simply ask, “What If?”

A History Lesson-

Franklin Roosevelt Democratic Nominee for President 1932

“Throughout the nation men and women, forgotten in the political philosophy of the Government, look to us here for guidance and for more equitable opportunity to share in the distribution of national wealth…. I pledge myself to a new deal for the American people. This is more than a political campaign. It is a call to arms.”

The New Deal wasn’t a “deal” at all. More so, it was the foundation of a Progressive agenda to move the nation further and further away from our constitution of individual liberties to a centralized large Government who knows best.

In a “Government Knows Best” effort, the New Deal encouraged private home building and sought to grow the number of people who owned homes. In this effort, the creation of the Home Owner’s Loan Corporation (HOLC) and the Federal Housing Administration (FHA).

Among the many mandates of the HOLC, the one I am going to focus on is the mandate to “Facilitate nationwide lending”. So, what exactly did “Facilitating Nationwide Lending” mean, what influence did it have on America?

It’s very important to understand that HOLC did not lend money. The HOLC bought and refinanced mortgages in default directly from the lenders by issuing bonds that paid out 3 or 4 percent. The HOLC had made 1,021,587 loans, essentially making it the owner of approximately 1/6^th of the urban home mortgage debt in the United States.

Doesn’t sound too bad…right? Well, here is where the problem comes into play. It is only successful when the people you refinance can afford the home at the new payment. In a jobless recovery like the one many say we are in now, if you refinance a struggling homeowner’s mortgage but, they have no income to pay for it, you end up back at square one, a foreclosure.

Sounds simple enough….right? Not really because with the HOPE and HAMP programs our government is essentially securing or backing the loan and if the homeowner defaults off the program, guess who is stuck with the bill………………………………….(keep guessing)………………………………….(DING,DING,DING)……….TIME IS UP.

It’s the American Taxpayer!

So, here is the question that I am bold enough to ask.

Why would anyone lawmaker get behind any “bail out” program for the homeowner if in the end, the homeowner still can’t afford the home, it still goes to foreclosure and the tax payer ultimately ends up paying the tab?

By the way, just to be clear, 73%-75% of HAMP / HOPE participants default off the program and end up in foreclosure in the first 3-5 months of participating.

As a realtor, I reviewed my first HAFA request with a client whom thought the letter receivd by overnight delivery was the same old thing just another letter informing her that she did not qualify for HAMP. There was exactly 14 days to respond and after a telephone call and four different departments and four different representatives we landed in the HAMP center which was outsourced to yet another company. Once we got to the right person and department promises were made verbally to my client and a series of letters are expected next. Looking forward to working in the HAFA program and hope this process is painless.

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.

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

Here are the basic eligibility requirements.

* The property is owner occupied.

*The mortgage loan is a first lien mortgage and originated on or before 1/1/2009.

*The mortgage is delinquent or default is reasonably forseeable.

*The current unpaid principal balanceequal to or less than $729,750.

*The borrower's total monthly mortgage payment exceeds 31% of his or her gross monthly income.

The lender must evaluate and offer a HAMP mod to borrower before consideration to HAFA options.

Do you know about the HAMP and HAFA regulations? Are You Aware this takes effect on April 5, 2010?

In response to an outcry for Uncle Sam to step in and provide uniform procedures for helping homeowners stay in their homes. This is how the HAFA, Home Affordable Foreclosure Alternatives Program, was born. HAFA is part of the HAMP, Home Affordable Modification Program. This provides incentives in connection with a short sale or a deed-in-lieu of foreclosure used to avoid foreclosure on a loan eligible for a modification under HAMP.
HAFA:
* Complements HAMP and provides a viable alternative for borrowers who are HAMP eligible but unable to keep their homes.
*Uses borrowers financial and hardship info previously collected for a mod.
*Allows borrowers to receive a pre-approved short sale prior to listing.
*Prohibits lenders from reducing real estate commission ( 6% )
*Requires borrowers to be fully released from future liability for the first mortgage ( no deficiency judgement is allowed).
*Uses set standard processes, documents and timeframe deadlines.
* Provides financial incentives: $1500 for borrower relocation assistance; $1000 for lender to cover admin and processing cost and up to $1000 for investors for allowing a total of up to $3000 in short sale proceeds to be distributed to subordinate lienholders.
The program begins on April 5, 2010 and ends on December 31, 2012.

You need to know who is eligible.

Are you ready?

I attended the Five Star Short Sale Summit in Vegas. What an awesome conference and certification. There are many changes coming down the pike for short sales. Now that there has been stadardization put in place for short sales the time frame from contract to close will become more reasonable.

The changes being made will force some accountability on the lenders as well as the borrowers. These distressed home owners will not be going straight into foreclosure with HAMP and HAFA in effect.

It is for seen there will be many more short sales in the future and less foreclosures. The bottom line is you will need your Short Sale Certification to ramp up business. Do you have yours?

It doesn't matter if REOs are here to stay or short sales are the new REOs. It's the sense of helplessness that it brings to the homeowners and agents alike.We are talking about the new revolution in real estate.

Will you be a fighter?

And yet, a new model of real estate snuck up on most of us. It started with a small band of rebels, the ones who threw away the old, tired rules and instituted fresh new ones. The rest of us stood by and watched, some of us in horror, some of us in awe, most of us hoping the rebellion would be short-lived, that soon we could return to the old model and the old way of doing things. But the rebels’ voices became louder and more strident.

They called it ‘The Short Sale Revolution’

Ultimately, we couldn’t do anything but notice.To notice, though, is not to accept.

First, we had to go through the 5 Stages of Grief.

Denial
Anger
Bargaining
Depression
Acceptance
At first, we entered a state of denial. This can’t be happening, we said to ourselves. And even if it is, it won’t last long.

Then we got angry ... good and angry. At the banks, at Wall Street, at Washington, at buyers, at sellers ... at the unfairness of it all. Why me? we whined. Why real estate? Why my profession? Why now?

Then we bargained for the old ways, stuck to our business models, and dug in our heels. Wishing and hoping all the while for everything to return to the way things used to be.

Towards the end, we became depressed, wondering if anything would ever be the same again. We experienced feelings of hopelessness and frustration. We mourned the loss of business and the putting off of dreams. We felt a lack of control and were confused about what to do next. Sometimes we cried. Other times we yelled and shook our fists at the sky.

Finally, realizing change was here to stay, we accepted the truth, and more importantly, understood it wasn’t our fault. We began to look for solutions. We started revising our business plans, throwing out what didn’t work, and trying new ways. During the process, we adapted to the way things are and not the way we wished them to be. We also learned that this is an ongoing process. If ‘this’ doesn’t work, maybe ‘that’ will. The learning curve is steep. The rules change constantly. We have to adapt every minute, every hour, every day. And we have to remember that we’re not only reinventing our business but reinventing ourselves.

What happens when foreclosures and short sales work their way out of the system ... one year, two years, three years from now? What then? Will all our hard work be wasted? Not in the least. Because we will have survived and become stronger for it. And we’ll be better at what we do.

It’s the dawn of a new era. Welcome it. Embrace it. Spit in its eye when you feel the urge. But keep on ‘keeping on’. The real estate market is here to stay, and so are we.

Need help in Southern California short sales, reos, loan modifications

call me

Carmen Cooley Graham 619 218 7390

Keller Williams

DRE # 012961519
Don't be a victim I am here to help.
www.Carmensellssandiego.com

carmencooleygraham@yahoo.com