Traps that Can Stop Your Short Sale

March 25, 2012 by  
Filed under Short Sales Stories

Watch out for Traps that Will Hurt Your Short Sale.

You are working along toward a successful short sale, when suddenly you are stopped dead in your tracks. Worse yet, you can have your file closed so you have to start over. What are the traps you need to know about?

Loan servicers will not process a short sale at the same time that they are processing a request for a loan modification. The concept is to work down a waterfall to take one step at a time. The Home Affordable Modification Program (HAMP) wants the borrower to start with a request for a loan modification. If that does not work, then the borrower is turned into a seller with Home Affordable Foreclosure Alternatives (HAFA). If you confuse this structure, it confuses the servicer, which means they destroy your short sale.

You can start a HAFA short sale just by asking to do a HAFA short sale. So, you can be moving through the HAFA review process, when the servicer asks the seller to call them. You have already discussed a loan modification with the borrower/seller and the idea was rejected. However, the servicer brings it up again and persuades the seller to ask to be considered for a loan modification. If your seller shows any interest, your short sale will be terminated and a loan modification file will be opened.

If you think this cannot happen, just listen to what happened to Stewart. He needed to move to another area for work and the mortgage on his house in Raleigh was larger than the value of his home. His short sale with Chase was taking so long that he had many calls from the collections department at Chase. During one phone call, he complained that he was having a hard time keeping up with the mortgage while the short sale was being considered because he was working out of town. The representative of the collections department said he could take his application for a loan modification that could make the payments less while he was being considered for a short sale. Stewart did not mention this conversation to our team. We continued to contract Chase every week and the short sale file suddenly was closed.

We found out why. You cannot do a short sale at the same time you do a modification, it is either one or the other. Stewart was furious because we had to start all over with the short sale. Because of the additional delay, the buyer walked away and I had to find another one. Be sure to counsel your sellers never to say anything that could be interpreted as a request to initiate a loan modification if they are in the middle of a short sale. If a loan modification is better for the buyer, pursue that first because if it is approved, you have done the best thing for your client. However, if a short sale is the best choice, watch out for the trap of a loan modification.

Another trap that involves loan modification is if your file is closed and you send in the short sale again, be sure the lender does not re-open the file as a loan modification. I was doing a short sale on an investment property with Wells Fargo. I should have asked more questions of the seller, because the property was in the name of a limited liability company (LLC) and I assumed that the loan was in that same name. It was not, the seller had transferred the property to the LLC after the purchase. I should have investigated this further and my team could have handled this better. Wells Fargo will not process the short sale under these circumstances, and rightly so, because the transfer by the borrower is a violation of the loan agreement. However, that can be corrected by transferring the property back to the original borrower?s names. Wells Fargo did not contact me to ask to correct the situation, they just closed the file. When made our regular call to keep track of the file, we discovered the problem. The supervisors at Wells Fargo apologized for not contacting me, but the file was still closed.

We re-submitted the entire short sale file. However, it was opened as a request for a loan modification instead of a request for a short sale. I have a hard time understanding how anyone could interpret our file as a request for a loan modification when it had a sales contract and a HUD closing statement. The borrower is clearly trying to sell the property and not keep it with a loan modification. Since it happened once, it can happen again. So, if you resubmit a file, check on it shortly after submission to be sure it is opened as a short sale and not a loan modification. I did not do as well as I could when we first started the short sale, so you can learn from me to check any investment properties held by an LLC. The title needs to be in the name on the loan. Wells Fargo did not do as well as it could when they re-opened the file. However, we are still working together with a new file and hope to get this short sale approved.

Another trap that kills short sales is the 14 day period to return the HAFA Short Sale Agreement (SSA). The loan servicer will send a proposed SSA to the borrower/seller. It needs to be signed and returned within 14 days of the date of the document. To make this process more entertaining, several servicers have a delay in their mailing system so that the SSA is mailed several days after it is dated. Be sure to get the SSA signed and returned within the time limit because the servicer can refuse to consider a HAFA short sale if it is late. The regulations specifically state that a servicer can still consider a HAFA short sale if the SSA is returned after the deadline. However, I am doing a short sale where the servicer refuses to allow us to do a HAFA short sale even though we feel that the SSA was returned before the 14 day deadline.

These are some of the traps that can stop your short sale in its tracks, or even kill it. Use these illustrations to watch out for other traps as you work your way through the short sale maze.

Bad BPO Creates a Bad Short Sale Decision

March 24, 2012 by  
Filed under Short Sale Do's & Don'ts

A rotten BPO will cause a rotten decision on your Short Sale

The lender is not getting fully paid in a short sale. However, the lender wants to know that the amount that is being offered is reasonable. No one would expect the lender to settle for an offer of one dollar. So, the lender needs to have some idea of the market value of the property being sold.

The estimate of the value can be an appraisal, but more often it is a Broker Price Opinion (BPO) because it is less expensive. An appraisal is done by a licensed appraiser and costs several hundred dollars. A BPO is done by a real estate agent where the cost ranges from free to about eighty dollars.

One of the biggest problems in short sale today is bad BPOs. Why?

In an old fashioned short sale, a sales contract is submitted to the loan servicer with a closing statement showing the amount of money that is being offered to the lender. Is that amount as much as you could get for the property? If the offer is market value, the answer is yes. The lender?s opinion of the market value is set by the BPO. If it is too high, the lender will reject a good offer and most likely foreclose. There are hundreds of stories where a good short sale offer was rejected and the lender sold it for much less after a foreclosure and spent much more money to foreclose on the property. The probable cause was a bad BPO.

In North Carolina, the Real Estate Commission has indicated that licensed real estate agents cannot do BPOs unless they have a reasonable expectation that the BPO will lead to getting a listing. For example, an asset manager for a lender contacts a Realtor when the lender is thinking about foreclosing on a property. They ask for a BPO to see how much money they would get after the foreclosure. If the lender forecloses, there is a chance the real estate agent will get to list the property. So, in this situation, the agent can do the BPO.

How about in a short sale? The property is already listed with another agent. Most of the time, there is already a contract that has been signed by the buyer and seller. How likely is it that the agent will get a listing?

Because of this requirement, many good real estate agents have stopped doing BPOs. I have heard of Realtors who used to do BPOs for lenders that have eliminated that part of their business completely and laid off all the people who used to work in that part of their company. The agents who will take the risk of doing a BPOs in a short sale situation in return for about $50 are not the cream of the crop.

One solution would be for the servicer considering the short sale to hire an appraiser. That is unlikely. The lender is not sure the proposed contract is any good, so it is a gamble to pay that much money to find out. This is particularly true when you consider that on a national average less than one third of proposed contracts on a short sale make it to closing. Furthermore, this would ask the lender to throw good money after bad, as it is unlikely that they will get the money back. After all the lender is already taking less money than what is owed on the loan.

The exception is Home Affordable Foreclosure Alternative (HAFA) short sales. As a part of creating the Short Sale Agreement (SSA) the price or the net proceeds is established at the time the property is listed. The regulations for Fannie Mae, Freddie Mac and the Non-GSE versions of HAFA all authorize the servicer to hire an appraiser and get an appraisal. In areas like North Carolina where the ability to get top quality real estate agents to do BPOs is restricted, getting an appraisal makes a lot of sense. Of course there are appraisals where the appraised value of the property is questionable.

So, what if the appraisal or the BPO is wrong? The regulations for Non-GSE HAFA short sales require that the servicer have a procedure to resolve disputes in the value. The real estate agent submits information to dispute the value and it is reviewed. Hopefully, the process comes to a reasonable result.

Fannie Mae has a Short Sale Assistance Desk. One if its primary functions is to resolve disputes over valuation. The multiple listing service (MLS) in the area where the property is located has to cooperate with this program by allowing Fannie Mae?s Short Sale Assistance Desk to have access to information in the MLS. The Fannie Mae representatives can review the comparable sales independently and come to a conclusion whether the BPO value or the listing agent?s opinion of the value is correct.

Believe it or not, there are boards of directors of multiple listing services around the country that will not allow Fannie Mae to have access to the data. I belong to one MLS that has taken that position. Agents like me who have been in the business for decades remember when the listing book was confidential information and the MLS wanted to keep it to themselves. I fought major battles to be able to put the listings that were for sale on my websites. Now, every listing in the MLS is all over the Internet. It looks like we are still fighting that same battle, because some members of these boards feel that the information about sold properties is proprietary. You can get most of that information from the tax records, just not the amount of closing costs paid and some other details. I cannot understand why the MLS sees a value in preventing the use of that information by Fannie Mae in a situation that will help agents, homeowners, buyers and neighboroods by resolving issues in short sales with a result that more short sales will close. Fannie Mae?s use of the information does not make that data public, they look only at what they need and do not open the data up to anyone but their organization.

In order to make the Short Sale Assistance Desk system work there are some MLSs that need to be more flexible. You could argue that Fannie Mae should be more flexible and look at the tax records, as they are public record. For high tech areas like Wake County, North Carolina, that would work fine as the data is all online. However, the tax records are not online in a large number of counties in America, as illustrated by several of the counties adjacent to Wake County.

Many of the loan servicers have an appeal procedure to review bad valuations. However, most of those procedures start with the listing agent submitting an appraisal. The short sale seller is broke, so that source of funding for the appraisal does not exist. The listing agent is taking a gamble already with all the time and money invested in the short sale. It is unreasonable for that agent to be the source of funding. The buyer is going to get an appraisal as a part of the financing for the buyer?s loan. However, most buyers will not invest the cost of the appraisal until the short sale is approved i.e. they do not want to pay for it until they know that they get to buy the house. There are some occasions where the buyer may be willing to take that risk.

The other choice is to provide enough information that anyone can see that the BPO value is not even close. I had a short sale being reviewed by Cartus, a good quality company that some loan servicers use to outsource the review of proposed short sales. We had a sale where a buyer, who had a pre-approval letter from a lender, would not perform when it was time to fund the loan. So, the sale did not close. I found a new buyer with virtually the same terms. The investor guidelines require that BPOs be current, and if they are too old, the servicer had to order a new one. Cartus ordered a new one. The BPO did not pass the smell test.

This was a sale in a condo complex of 360 units, so it was a big enough neighborhood to have its own value. I had sold five of the same condo units in that complex in the last six months i.e. the same bedrooms, baths, garages and square footage. The prices range from $128,000 to $135,000. The BPO said the value was $152,000. The BPO did not use any comparable values from the complex itself going into much more prestigious areas to find ?comps?. Cartus could not approve my short sale even though the same lender had approved a short sale on the same property at the same price just a month before.

I figured out who did the BPO by checking the reports of who showed the property. The agent was from way, way out of town. I called him. He said he could not talk to me, so I said he did not have to talk, he could just listen. I sent him the comps from the complex and suggested he might want to keep his relationship with whoever ordered the BPO. If his value was found to be way off, he might not keep that relationship. So, he might want to send in an amendment to improve the quality of his rating with whoever ordered the BPO. He would not listen.

So, Cartus ordered another BPO. This one got the value right. However, during the delay, the buyer walked away. You have probably noticed a recurring theme thoughout Creat A Short Sale. The mistakes and delays in the review process cause the buyers to walk away. If found another buyer and the short sale has just been approved.

The previous story will give you one tool you can use to overcome a bad BPO. The BPO will die a natural death if it gets too old. So, wait for it to die. Then, the reviewer can ask for a new BPO and you get to pray that its value is better. You may have to let the file get closed, then get it re-opened. You may have to resubmit the whole short sale. Or, you might have a negotiator that is able to keep the file long enough for the smelly BPO to die. Find out the procedure and you may be able to use a delay in the review to your advantage, for once.

In a previous chapter, I discuss how you can help the reviewer by providing comparable values, knowledge of the market trends and information about defects, repairs, mold and other issues that affect the value of the property. When you get a second chance, do everything you can to help the BPO agent get a valid value.

BPOs remind me of a favorite phrase used by my grandson Sam when he was about three years old. When I would discover him creating a disaster in the kitchen, he would say ?It?s a mess.? It is hard for a grandpa to be upset when he is laughing at a cute phrase, good move Sam. Sammy is right, when it comes to BPO values, ?it?s a mess.?

Must Have Links to Short Sale Resources

March 16, 2012 by  
Filed under Short Sale Do's & Don'ts

Your Links to Information Sources for Short Sales

I gave a webinar for my fellow members of the other day and handed out a table of links to sources on the Internet that have information they could use in short sales. There have been a great deal of request for that table, so it is posted here for everyone to use.

The Blog on How to HAFA

Entire Non-GSE HAFA Manual from US Treasury

Forms for Non-GSE HAFA Short Sale, Click on Borrower Documents
HAFA Matrix with each lender?s Non-GSE HAFA requirements

Fannie Mae HAFA Short Sale Forms
Fannie Mae Servicing Guide

Freddie Mac HAFA information
Summary of Freddie Mac HAFA table comparing the three kinds of HAFA (some info is old)

Bank of America. Click on Short Sale Resources

I hope this helps you. Feel free to suggest more links that can be shared with everyone else.

REO Settlement Speeds Up Short Sales

March 16, 2012 by  
Filed under Short Sale How To

Short Sales Will Speed Up

One of the problems with short sales is to get a buyer to make an offer and wait until the lender approves that short payment. The Attorneys General of nearly every state in America are in the process of settling litigation with all the major banks over violations of the foreclosure procedures. However, this settlement that is primarily designed to straighten out the sale of bank owned properties (REOs) appears to include a component that will speed up short sales. The quicker the processing, the more buyers will “stay the course” and the more short sales will close.

Realtor Magazind quotes an article in the Real Estate Daily News that says

As part of a settlement with state attorneys general, the five largest mortgage servicers are adopting new requirements for short sales, which is expected to speed-up what has been known as a lengthy process.

Here are some of the new requirements for servicers under the settlement:

  • Servicers must provide borrowers with a decision within 30 days after receiving a short sale package request.
  • Servicers will be required to notify a borrower, also within 30 days, if any necessary documents are missing to process the short sale request.
  • Servicers must notify a borrower immediately if a deficiency payment is needed to approve the short sale. They also must provide an estimated amount for the deficiency payment needed for the short sale.
  • Servicers are also required to form an internal group to review all short sale requests.
  • Banks will be considered in violation of the settlement requirements if they take longer than 30 days on more than 10 percent of the short sale requests. Violations can carry fines of up to $1 million and $5 million for repeat offenses.

This article spreads good news. One of the problems with short sale’s loss mitigation departments is that they are understaffed, so the overworked negotiators have a hard time handling their case load. If there are penalties of $1 million to $5 million, the lenders should greatly expand their staff to spend the money on good employees who will be a benefit to their firm instead of paying penalties. When you consider that a lender makes between 20% and 30% more from a short sale than from selling the same property after a foreclosure, this expansion of the loss mitigation department will benefit the lenders tremendously. At the same time, it will benefit sellers who will get quicker approvals, buyers who will be able to move in more quickly and Realtors who will have a smoother process and more closings.

This sounds like good news to me. How does it sound to you>

HAFA Short Sales Latest Revisions

March 12, 2012 by  
Filed under Short Sale How To

The HAFA Short Sale Process Just Changed Again

On March 9, 2012 the US Treasury issued Supplemental Directive 12-02 that has revisions to the Home Affordable Foreclosure Alternatives (HAFA) Short Sale program. The changes will let more sellers qualify for HAFA and make it possible for more sales with junior liens to close. For example, I did a short sale on the townhouse in the picture and the seller might have qualified for a HAFA Short Sale under these new rules.

A HAFA short sale only applies to a seller?s principal residence. Under the original Treasury regulations, the owner had to be occupying the home to qualify for HAFA. There was an exception to this rule if the owner had moved over 100 miles within the last 90 days for work. That requirement was later modified to be that the owner could have moved within the last 12 months for any reason. Now, the policy is ?There are no longer any occupancy requirements for HAFA eligibility.? The property still needs to qualify as the owners principal residence under Section 121 of the Internal Revenue Code, which requires that an owner live in the property for two years in the property during the five years before the sale (don?t you love how complex IRS rules are?). I assume HAFA still has the policy that the seller must not have purchased another principal residence in the year before the sale, but the directive that changes this rule does not discuss that issue.

What does this mean? More sellers qualify for HAFA. The owner of the townhouse in the picture had moved out of it before doing a Short Sale and had not moved 100 miles, so she did not qualify under the regulations in effect at the time. Now, the fact that she moved would not have disqualified her.

Junior lien holders are loans recorded against the property after the first loan. The most frequent example is a Home Equity Line of Credit (HELOC) that is recorded as a second loan on the property. The old rules limited the total payment to all junior lien holders to add up to $6,000. That number is increased to $8,500.

Governmental regulations are occasionally humorous. HAFA applies to first loans only. This regulation restricts what you can do with second loans. The lenders who have second loans do not have to obey these rules. It is just like the speed limit laws of one state do not apply to the people driving in the next state. However, this revision will allow the lenders who have the first loan to offer more money to the lenders who have the second loan.

What does this mean? More second lenders will accept the HAFA contract so more HAFA Short Sales will close.

The seller who qualifies for a HAFA Short Sale receives a relocation incentive of $3,000. This solves the problem of getting a seller who has no money to move out of the house. The new directive amends this policy to allow the payment only if the borrower or a tenant currently occupies the property and is required to move when the Short Sale closes. For once, a HAFA regulation makes sense. You pay relocation benefits only if someone has to relocate. This will give the lenders who approve the Short Sale more money in these situations.

What does this mean? The incentive to do a HAFA Short Sale just decreased, so some sellers who were encouraged to do a HAFA short sale by receiving $3,000 at closing might make a different decision.

There are additional revisions to the regulations for monthly payments (the borrower can make the full payment during the Short Sale) and the reporting of a HAFA Short Sale to the credit reporting bureaus.

Is this good news? Yes. More sellers qualify, more sales will close and the lenders only pay relocation when someone relocates

How To HAFA: The Process from Start to Finish

March 11, 2012 by  
Filed under Short Sale How To

How Do You Do a HAFA Short Sale? Here?s the 2012 version.

Home Affordable Foreclosure Alternatives (HAFA) have some major advantages over the original versions of Short Sales. A walk through the whole process will show you the advantages while teaching you the procedure.
As a Realtor, one of the first things you discuss is why a homeowner wants to move. At some point, you need to discuss the value of the home compared to the amount of the mortgage. There are an abundance of homeowners where the amount of money you can get from the sale of the home will not fully pay off the mortgage(s), and those homeowners need to consider a short sale. To qualify for a Home Affordable Foreclosure Alternatives (HAFA) Short Sale, the home needs to be the primary residence, either now or within the last year. Next, there needs to be a hardship that has changed the owner?s ability to pay the mortgage. Finally, they need to be in a poor financial condition so that they do not have resources that would enable them to continue to make the payments on their home. If they meet these criteria, they are good candidates for HAFA. If they want to consider selling their home with a HAFA Short Sale, I ask this kind of seller to get the entire short sale package together and meet me at my office. If they are willing to get the package together and to take the time to come to my office, it is an indication that they are motivated enough to work their way through this long process.
While you are interviewing the sellers, you need to find out who is the servicer for their loan. Most people call the company who receives their payments their lender, but lets call them the loan servicer to differentiate the servicer from the investor who owns the loan. It is important to review the individual guidelines for the loan servicer you will be working with because these ?the rules of the game? may differ from one servicer to another. To find their rules, go to the HAFA Matrix that is on the website, which is at, and look up the loan servicer for this property. You will get the servicer?s guidelines i.e their interpretation of how to do a HAFA short sale. Every lender is required to have their matrix posted on this website. For example, the guidelines in the Making Home Affordable Manual allow the servicer to require the seller to make monthly payments during the time the property is for sale. However, the Wells Fargo Matrix says that no monthly payments are required, and this is important information for your seller with a Wells Fargo first loan.
Get as much information as you can about the loans on the property, such as the loan number and outstanding balance. Why? You want to see which version of HAFA you might be doing. There are three versions: (1) Fannie Mae HAFA (2) Freddie Mac HAFA and (3) HAFA for Non-GSE Loans i.e. ones that are not Fannie Mae or Freddie Mac loans and ones that are not guaranteed by FHA, VA or USDA. You might also have a FHA loan, and it has its own version of a short sale. For the sake of this discussion, we will do a Non-GSE HAFA in this chapter, and you can look at the other chapters that deal with the differences between the various versions of HAFA to see what you need to do differently. First, check to see that the outstanding balance of the loan is $729,750 or less, as that is one of the requirements to qualify for this type of HAFA .
Before you meet with the sellers, send them a letter of authorization for their signature because that authorization is necessary for you can talk to their lender. Include in that authorization permission to check any website to see what kind of loan that they have. After you receive that authorization, go to to see if it is a loan owned by Fannie Mae. If it is not, go to to see if the loan is owned by Freddie Mac. You need to have permission to look up a property on these websites, so get the authorization first. Ask the buyers to bring their loan statements so you can find out if it is an FHA, VA or USDA loan. If it is none of these, you proceed with this non-GSE version of HAFA.
The loan servicer?s matrix will also tell you what documents are required by the lender to process a Short Sale. Send the list to your sellers and ask them to bring everything on the list to the appointment. Also, be sure to have them bring any correspondence they have received from their loan servicer, as you need to know what has been going on before you step into the picture. If you are confident that they will qualify for HAFA, send them the HAFA documents that you will need to start the process, like the MHA Request for Mortgage Assistance (RMA) and the MHA Third Party Authorization Form. It may be a good idea to send the Dodd-Frank Certification because it will have to be signed eventually, but most servicers include that with the Short Sale Agreement so you could skip it at this stage. The servicer would like it if find these forms on your loan servicer?s website, because it is the easiest for them to review. However, you can find all the forms on the website at (click on the Borrower Documents Tab).
While you are on that website, you will find all the standard forms for a HAFA Short Sale. It is a good idea to review all of them because you will be dealing with them throughout the HAFA process. One of the benefits of HAFA is that standard forms are used, so your understanding of the documents on the HMPadmin website will cover all of the lenders you work with. Normally, the only change the lender makes to the standard form is to put their name and logo on it.
The meeting to discuss listing the home is similar to any other listing appointment, except that the sellers need your special talent of doing short sales so the negotiating dynamics are different. They do not try to cut your commission because it comes out of the proceeds of the sale, so long as the borrower or a tenant is living in the house. The regulations issued March 9, 2012 restrict the payment of relocation assistance to situations where someone is actually relocating i.e. no payment if the house is vacant. Also, it is good for you to let them know that they will get a $3,000 relocation allowance upon the successful closing. This gives them more incentive to finish the sale. Finally, they are not trying to get you to over value the home, because they will get the same amount no matter what the sales price. Since they want the process to finish quickly, they will want the home priced for a quick sale.
A critical part of the first meeting is to review any documents they have received from the lender. If the lender has sent a letter inviting them to do a HAFA short sale, you hope your meeting is less than 14 days after the date of the letter. If more than 14 days have passed, the servicer does not have to allow the seller to do a HAFA short sale. If they are about to start a foreclosure, you need to hurry and submit your HAFA request because some lender?s guidelines to their servicers prohibit considering the property for a HAFA short sale if the foreclosure process has started. So, if you see a letter saying the lender is going to accelerate the entire amount due on the loan, get your HAFA request in quickly, because the foreclosure has not started, but it is about to. Also, if the foreclosure is less than seven business days away, some servicers will not stop the foreclosure, relying on the wording in the Making Home Affordable Manual concerning Escalation Cases where they do not have to stop the foreclosure if it is less than 7 business days away. As a side note, if you have a Fannie Mae loan, you need permission from Fannie Mae (not just the servicer) to start a HAFA short sale if the foreclosure sale date is 60 days or less in the future.
HAFA requires certain language in listing agreement . It must say ?Seller may cancel this Agreement prior to the ending date of the listing period without advance notice to the real estate agent or broker and without payment of a commission or any other consideration, if the property is conveyed to the mortgage insurer or the mortgage holder. Sale of the property is contingent on written agreement of all sale terms by the mortgage holder and mortgage insurer (if applicable). ? Be sure to put that clause in the listing, or prepare an amendment to add that language, because the servicer will require that wording to be in the listing agreement.
The regulations state that the borrower can request consideration for HAFA in a number of ways, even by talking to the servicer over the phone and just asking for it. It is a better practice to use a letter to request that the lender review the borrower and the property for a HAFA short sale so that you have proof of that request. Typically, we send the letter as soon as possible, even if we do not have the entire HAFA package together, because it starts the 45 day time limit running. The loan servicer has 45 days from the request to approve or deny the HAFA request, and has to acknowledge the HAFA request in writing within 10 days. Get the rest of the package to the loan servicer as quickly as possible so that the package is complete by the time any reviewer looks at it.
Mortgage insurance is one of the worst things in a non-HAFA short sale, because the mortgage insurance company frequently asks for unreasonable contributions from the seller, who is broke and unable to contribute. Usually, that request by the mortgage insurance company has to be converted into an increase in the payment by the buyer. Then, mortgage insurance companies frequently ask for the seller to sign a note with extended payments to pay a portion of the deficiency i.e. the amount that the mortgage payoff is ?short?. When it works, one of the benefits of HAFA is that the mortgage insurance company has to agree with the terms of HAFA sale and agree to release the seller from any additional liability without any additional payment and without signing a note. However, I have had applications for HAFA short sales turned down because the mortgage insurance company will not agree with these requirements of the Short Sale Agreement (SSA).
If the servicer approves the request for a HAFA short sale, you will get a Short Sale Agreement (SSA) filled out with the terms of their approval. The agreement must be for at least 120 days, so you will get that long to sell the property. That time limit can be extended up to a total term of 12 months from the beginning of the Short Sale Agreement (SSA).
The Short Sale Agreement (SSA) also resolves the most troublesome issue in short sales. The seller will have no liability for any deficiency in the payments after the sale closes. The lender(s) are not getting fully paid in a short sale, because the payment is ?short?. The amount by which it is ?short? is called the deficiency. HAFA requires that any liability for the deficiency be waived by all of the lien holders and the mortgage insurance company, if there is one. So, the seller has no liability to any of the mortgage holders or their insurers after the sale closes. The Short Sale Agreement (SSA) also requires that the servicer cannot require any payment by the seller for any of the services rendered during the sale.
One of the required terms is that the property must be listed with a licensed professional, so there are no For Sale By Owner HAFA Short Sales. Since a real estate professional is required, there is going to be the payment of a commission. HAFA settles the battle that has been raging over cutting Realtor?s commission. The Short Sale Agreement (SSA) approves the real estate commission found in the listing agreement so long as it is 6% or less. The Short Sale Agreement (SSA) also specifies the other closing costs that the lender will allow to be paid on the closing statement.
As a part of the review of the request to do a HAFA short sale, the lender gathers information about the market value of the property, either by doing an appraisal or a broker price opinion (BPO). Using this opinion of market value, the Short Sale Agreement (SSA) will either specify the asking price for the property, or provide the minimum net proceeds (MNP) that the lender will accept. This can be wonderful information. At worst, it will tell you how to price the property. At best, it tells you exactly what payment to the lender needs to be shown on line 504 of the HUD closing statement. Knowing the minimum net proceeds allows you can work backwards by adding in the costs of the sale to determine the lowest price that will be accepted by the lender.
The servicer cannot raise the price or the amount of the minimum net proceeds during the period of time that the Short Sale Agreement is in effect. They can lower the price, and that is necessary on many occasions.
If the appraisal or broker price opinion (BPO) that was done by the lender is too high, the amount of the payment in the Short Sale Agreement (SSA) will be too high. In a market full of bank owned properties and discounted sales, putting a high price on a property is the kiss of death. The Treasury regulations require the servicer to have a procedure to dispute incorrect valuations, so use that procedure to correct any errors. It is better to have this battle at the beginning of the listing period instead of a fight that delays the review of an offer to purchase, where the impatient buyer may walk away if the process takes too long.
The regulations require that the servicer sign the Short Sale Agreement (SSA), but most of the ones I have received have not been signed by the servicer. The seller needs to sign and return the Short Sale Agreement (SSA) within 14 days, so do not miss that deadline.
If you have a Short Sale Agreement, use that in your marketing to separate your property from other Short Sales on the market. Be sure you advertise that you have a HAFA approved short sale and explain what that means in detail in the Multiple Listing Service listing. By getting a Short Sale Agreement, you have already established that the seller qualifies for a HAFA short sale and you have already determined the price that the lender will accept. All you need now is an offer that gives you the minimum net proceeds (MNP).
When you get an offer, you have three business days to submit it to the servicer. Don?t be late. You submit a Request for Approval of Short Sale (RASS), along with a copy of the signed sales contract (and all its addenda) along with proof that the buyer has the funds to close (for a cash sale) or a pre-approval letter from a lender (for a sale with financing). If there are junior liens, you also need to submit information regarding the status of the negotiations with those lien holders. If you are doing a Short Sale on Equator or, you upload the information to that portal and follow up with the required documents.
The regulations allow electronic signatures on documents like the sales contract. So, you can use something like DocuSign. However, many servicers will not allow that. Currently, Bank of America does not allow electronic signatures on Short Sales that are processed through Equator. Isn?t it ironic that it is permissible to use a totally electronic system like Equator to review the entire short sale, but you cannot use an electronic system like DocuSign to sign the sales contract.
If you have junior liens, like home equity loans, the maximum amount to be paid to all of those liens used to be limited to $6,000 by the HAFA regulations, but they just changed on March 9, 2012 to allow a total of $8,500. One of the ?joys? of the HAFA regulations is that they only apply to first lien holders. The second liens do not have to abide by these regulations. You have to enjoy the fact that the second lien holders are the ones that take the largest loss in a HAFA Short Sale, yet HAFA is a regulation that does not govern them. It is about the same as passing a speed limit law in one state and trying to get the people in the next state to abide by it. Just be thankful that the regulations were revised to eliminate the former requirement that the junior lien holders could only get 6% of the outstanding balance. However, that 6% requirement still remains in Fannie Mae short sales. You need to show the payment to the junior lien holder(s) on the Request for Approval of Short Sale and any HUD closing statement submitted for approval.
The servicer has 10 business days to approve or disapprove the proposed sale. I had one Short Sale with Countrywide during the transition to Bank of America that took 14 months to get approved. By comparison, ten business days is a dream. Unfortunately, I have had a number of HAFA Short Sales where the servicer takes longer than that.
If you know the minimum net proceeds that has been approved in the Short Sale Agreement and you know that the amount to be paid to the lender on line 504 of the HUD closing statement is equal to that amount (or greater), you know you have a deal from the time you submit the proposed contract. The regulations say the servicer ?must approve the RASS if the net proceeds? equal or exceed the Minimum Net determined in the Short Sale Agreement. If the amount from the sale proceeds is less than the amount approved in the Short Sale Agreement (SSA), it is still possible that the servicer can approve the proposed sales contract. If they cannot approve it, get a counter offer to take back to the buyer and explain that it is the minimum that the lender will accept. Many buyers will increase their offer after they have invested all the time and energy to try to get a property to live in.
What if you get an offer before you get the Short Sale Agreement (SSA) approved, or if you did not ask for a HAFA short sale when you took the listing. Submit an Alternative Request for Approval of Short Sale (Alternative RASS) to the servicer. They have 45 days to accept, reject or counter the terms of the proposed contract of sale.
A HAFA short sale has to be an ?arm?s length? transaction where there is no collusion among the participants. Most servicers have an arms length affidavit that they want to have signed by the buyer, seller and all the Realtors and the signatures have to be notarized.
The HAFA regulations prohibit the servicer from asking for a financial contribution from the seller or any of the Realtors. This is both a blessing and a curse. While it is good to avoid this form of negotiation, sometimes a closing is delayed and someone needs to throw in some money to pay the additional property taxes and other charges that accrued because of the delay. There are a million other reasons why some additional money is needed to meet the minimum net proceeds required by the lender. The Realtors and the seller cannot make that payment on the HUD. So, this requirement takes away one of your tools to close the sale, but it keeps more money in your pocket.
The seller gets paid a $3,000 relocation incentive at closing. The seller can use some of the $3,000 relocation allowance to pay for transaction costs (e.g. his lawyer), overdue utility bills and minor repairs. The seller has to give written instructions to the escrow or closing attorney to do this. This relocation incentive cannot be used to pay junior liens, and the servicer cannot require the seller to make any payments as a condition of approval (the buyer has to volunteer to do that).
If the proposed contract is approved in response to your RASS or Alternative RASS, you will get a written approval of the Short Sale that has instructions for closing the sale. Give this to your escrow officer or closing attorney. Be sure to review the letter of approval to verify that the terms of the approval are consistent with the terms of your sale. In other words, check all the amounts that are approved to be paid on this approval to be certain that they are consistent with the amount you propose to pay on the closing statement. The most important number is the amount to be paid to the lender on line 504 of the HUD because that is the minimum net proceeds that they will require no matter what happens to any of your other costs.
One of the terms of this approval will require that the HUD closing statement be sent to the loan servicer for review just before closing. Some servicers want it at least 24 hours before closing and others like some Chase offices want 72 hours. You have to send the HUD for approval before closing, otherwise the servicer can refuse to perform the short sale. My favorite irony occurred when I submitted a HUD to Bank of America nine days before closing. Bank of America will not allow the HUD to be uploaded to Equator more than five business days before the closing date, so it was rejected. It was resubmitted as early as possible on the fifth day before closing. The reviewer asked that the HUD be changed, and a revised HUD was submitted. The reviewer thought of another change, so it was revised and submitted again. Then, there was a request for another new change, and a revised HUD. You get the picture, more changes that were not requested before. The process of making new requests for revisions continued so long that the closing was nearly delayed in order to get the approval of the loan servicer. However, if the process was easy and considerate, it would not be a Short Sale.
By the way, the seller is not the only one who gets an incentive. The servicer gets $1,500 for every short sale that closes. Also, the investor gets one third of the amount that it allows the junior lien holders to be paid, up to a maximum of $6,000. For example, if the investor who owns the first loan allows the home equity loan in second position to be paid $6,000, the investor receives $2,000.
How many times have you had to call a servicer when you are working on a Short Sale and beg for the foreclosure to be postponed? I had one with Chase that took everything but an act of Congress (even the managing partner of the foreclosing law firm was working to get it postponed), and Freddie Mac postponed it only a few hours before the actual sale. You do not need the adrenaline rush of facing disaster right up until moments before your deal is killed by a foreclosure sale. You do not get that with HAFA.
The HAFA process gives you protection from the completion of a foreclosure sale. The servicer may process the foreclosure, but cannot complete the foreclosure sale during any of these times:
(1) While determining the borrower?s eligibility and qualification for HAFA.
(2) Until a date that is 5 business days after the date that the servicer sends the notice
that a HAFA short sale is not available.
(3) While awaiting the timely return of a fully executed SSA.
(4) During the term of a fully executed Short Sale Agreement (SSA)
(5) Pending transfer of property ownership based on an approved sales contract per the Request for Approval of Short Sale (RASS) or Alternative RASS.
(6) Pending transfer of property ownership via a Deed in Lieu by the date specified in the SSA or Deed in Lieu Agreement.
(7) Until the servicer has resolved an Escalated Case
So, you will not have to call and beg to get the foreclosure sale postponed so long as you fall under one of these categories.
What if you do not get a contract from any buyer? If the time specified in the Short Sale Agreement for the marketing of the home is about to expire, ask for an extension of the Short Sale Agreement. If you let the time run out, some servicers have taken the position that they do not need to review another request for a HAFA short sale. So, do not let your HAFA approval of the Short Sale Agreement die. Be sure to request an extension well in advance of the ending date of that agreement.
This is a long walk through the process. Even though it is long, it is the best process we have, because it approves the seller for a short sale while it tells the agent the amount needed for the sale so that the agent does not need to guess at the price needed for a contract. Then, it speeds up the review after a sales contract is submitted to keep the buyers from walking away. It greatly encourages a seller to do the short sale by eliminating the seller?s liability for a deficiency (and the $3,000 payment does not hurt). Also, it protects the Realtor?s commission and postpones foreclosure to allow the Short Sale to succeed. It still needs improvement, but it is the best procedure we have so far.

Treasury Clarifies HAFA Short Sale Regulations

March 10, 2012 by  
Filed under Short Sale How To

On March 30, 2011, the Treasury clarified the rules for the Home Affordable Foreclosure Alternative Short Sales, better known as HAFA, in a directive whose rules become effective June 1, 2011. If you want the ultimate resource for dealing with HAFA, get the Making Home Affordable Handbook for Servicers of Non-GSE Mortgages that can be found at . Most of the material on the Home Affordable Foreclosure Alternative program in in Chapter 4 from pages 121 to 135. It is a great cure for insomnia, just try to read the entire manual and you will be asleep.

There wasn?t enough paperwork and administrative detail in short sales, right? I mean the short sale packages were only about 100 pages. So, the Dodd-Frank Wall Street Reform and Consumer Protection Act created the requirement that the Dodd-Frank Certification be signed as a part of the HAFA short sale package. Dodd- Frank prohibits people convicted of certain crimes from getting help under the Making Home Affordable program, and HAFA is part of that program. The Certification makes the borrower ? certify under penalty of perjury that I/we have not been convicted within the last 10 years of any
one of the following in connection with a mortgage or real estate transaction
(a) felony larceny, theft, fraud, or forgery,
(b) money laundering or
(c) tax evasion.?

I enjoy the way that is worded. It says you have not been convicted of any one of the following. What if you were convicted of two of the following? The time limits in this Treasury directive mainly apply to HAMP modifications. Even under HAFA, if you do not return the Dodd-Frank Certification within the time limit, the lender does not have to proceed with processing your request. As applied to this discussion, they could refuse to approve your request to initiate a HAFA short sale or approve a sales contract for a short sale under HAFA. So, do not give the servicer the ability to close your file. They have too many files to handle already, so it is tempting to someone processing your request to get your file off their desk by closing it for failure to submit documents on time.

The Making Home Affordable Manual makes it clear that the Escalation Case procedure applies to HAFA, in Section 5 of Chapter IV. The Escalation Case procedure is found in the first chapter of the manual that deals with general requirements of the Making Home Affordable program, and HAFA is one part of that program. The HAMP program has a separate chapter and HAFA has a separate chapter and both programs have the Escalation Case procedure.

Escalation is an extremely valuable procedure for Realtors and sellers using the HAFA process for a Short Sale. This directive specifies time limits for the review when you ask for your case to be escalated. The servicer has to acknowledge your request and indicate when they will resolve it, with a date that is not more than 30 calendar days from the date the servicer received the escalated case. If they do not resolve it within that time, they have to give you reports every 15 days until it is resolved.

The servicer?s staff handling the escalated cases must be accessible by phone and email. How many times have you tried to call a negotiator and gotten nowhere, with the servicer even refusing to give you an email address for the people involved? Get the file escalated and you are entitled to a phone number and email address.

The servicer actually has to respond to the request for escalation and determine what should be done. If the escalation was referred to the servicer by the HAMP Solution Center (HSC) or Making Home Affordable Help, the servicer cannot come to a determination without the concurrence of the referring organization. To get in touch with Making Home Affordable Help, call the Making Home Affordable hotline of 1-888-995-HOPE (4673) and ask for MHA Help. So, if you want a more powerful review, call the hotline, ask for MHA Help and get your escalation initiated in a manner that requires the review not only of the servicer but of the MHA Help desk.

One of the best uses of escalation is to postpone a foreclosure. The MHA Handbook states that ?A servicer may not refer any loan to foreclosure or conduct a scheduled foreclosure sale (except , , ,) unless and until the servicer has resolved the Escalated Case.? If you are not getting an answer to your proposed short sale and they are going to start to foreclose, or worse yet the foreclosure sale date is looming, contact the servicer and ask for Escalation. If they do not respond properly, contact the MHA Hotline and ask for MHA Help. During the review of the escalation, they cannot foreclose, with certain exceptions e.g. the servicer makes every effort to postpone the foreclosure and the court or governmental agency that performs the sale refuses to postpone it, something that is as rare. The most important exception to this rule is that the servicer does not have to postpone the foreclosure sale if the escalation is received ?after midnight of the seventh business day prior to the foreclosure sale date.? In other words, if you are getting within ten calendar days of the foreclosure sale date, you need to escalate right away.

Remember the revision to the HAFA rules that allowed a seller (borrower) to move out of their primary residence for up to a year and still qualify for HAFA. This directive says the seller has to provide third party verification that it was their primary residence. The seller?s affidavit is not enough proof. So, get prepared with utility bills and other proof that the seller lived there prior to moving out.

Within 10 business days, loan servicers are now required to acknowledge in writing that the servicer has received your request for the initiation of a HAFA short sale, or the Alternative Request for Approval of a Short Sale (RASS) that reviews a proposed sale. This written response must include the servicer?s evaluation process and a timeline for their decision. So, they have to tell you what they are going to do and estimate how long it will take to do it.

Remember the last revisions to the Home Affordable Foreclosure Alternative (HAFA) short sale rules that extended the time for the loan servicer?s response to 30 days? Here we go again. This one extends the time for the response to 45 days. So if you submit a request to get a seller and a home approved for a Home Affordable Foreclosure Alternative (HAFA) Short Sale, or if you get an offer and want to submit an Alternative Request for Approval of Short Sale (Alternative RASS), the loan service has 45 days to give you an answer. For the request to initiate a HAFA short sale, the answer is either a rejection or an approved Short Sale Agreement (SSA). For the response to a proposed sales contract under an Alternative RASS, they must give you an approval of the short sale contract, rejection of that contract or a counter offer within 45 days.

You would think that 45 days would be enough. BUT NOOOO! If the servicer is unable to respond within 45 calendar days they must send a written ?status notice? to the borrower (seller) and written updates every 15 calendar days after that until the servicer responds. How much do you want to bet that the next revision gives the servicers even more time. The biggest reason that buyers shy away from short sales is that they take so long to get an approval. The HAFA short sale program is supposed to make the process so much quicker that it will attract more buyers. The more time that is given to the servicers, the fewer short sales and the more foreclosures.

Short sales have to be ?arms length? transactions so that there is no underhanded dealings that deprives the lender of the proper proceeds. The new directive creates an exception for non-profit organizations that purchase HAFA short sales and rent them or re-sell them to the former owners. Otherwise, the rules for ?arms length? transactions are so strict that I have even had servicers question a short sale when the buyer is a tenant in the property. Some lenders take so long to review short sales that I have had to allow the buyer to move into the property under a lease agreement in order to keep them from walking away. Then, you get the servicer who caused the delay creating more problems by questioning the validity of the transaction. It seems that when you solve one problem, the servicers are able to create another one.

These revisions provide some gain and some loss. Provided the escalation provisions apply to short sales, they provide a powerful tool to get your Short Sale on track and to prevent a foreclosure in the meantime. On the other hand, the servicers get more time to review HAFA requests, and all of the delays hurt the ability to keep buyers interested. These changes make you realize that you win some and you lose some.

Changes in HAFA Short Sales

March 9, 2012 by  
Filed under Short Sale How To

The treasury revised the regulations for the Home Affordable Foreclosure Alternative (HAFA) short sales December 28, 2010 with mofications that were effective February 1, 2011. These regulations do not apply to loans owned by Fannie Mae, Freddie Mac or insured by FHA, VA or USDA. In other words, the rules apply to everyone except the government. I find it entertaining that the government makes these rules that apply to everyone except the government.

The revisions appear to be in response to the fact that few HAFA short sales were approved in 2010, so the regulations made it easier to qualify. The regulations still limit HAFA to loans originated before 2009, so recently refinanced loans do not qualify. Also, the loan amount of the loan has to be $729,750 (which does not apply to Fannie Mae and Freddie Mac HAFA’s, but those are “different animals”). To increase the numbers of HAFA short sales, the requirement that the mortgage payment exceed 31% of the borrower’s gross income was eliminated. HAFA was created to be a follow up to the Home Affordable Modification Program (HAMP), so that people who could not get their problems worked out with a HAMP modification could pursue a HAFA short sale. HAMP has the 31% requirement. Now, HAFA is not restricted by that.

HAFA applies to the borrower’s principal residence, not to second homes or investment property. The former HAFA rules severly restricted the number of people who could qualify if the borrower had moved out of the property because the property could only be unoccpied (by the borrower) for up to 90 days AND the borrower had to move over 100 miles for work. That is all out the window with the new rules. The property can be vacant or rented to someone else for up to a year. There is no requirement for how far away the borrower moved. These time limits are for the time up to the date of the Short Sale Agreement (SSA) or the Alternative Request for Approval of Short Sale (Alternative RASS).

The former regulations limited the payments to the junior lien holders to 6% of the outstanding balance. So, a second loan of $20,000 could receive a maximum of $1,200. That was a problem because most lenders in second position would not settle for less than 10%. The 6% limit has been discarded by the new regulations. The total of the payments to all the junior lien holders is limited to a total of $6,000, but there is no limit on what percentage of the loan is paid. The investor that owns the first loan still gets an incentive payment from the Treasury of one third of the amount that they allow to be paid to the junior lien holders. So, the investor will receive $2,000 if they allow the second and third loans to have payment that add up to $6,000. (Note: a later revision to the HAFA regulations increased this amount to $8,500 for Non-GSE HAFA short sales.)

The borrower asks the loan servicer to allow them to do a HAFA short sale. The new regulations say the servicer is supposed to approve or disapprove that request and send the Short Sale Agreement if approved within 30 calendar days. Don’t hold your breath! Compliance with this time limit is dismal. Similarly, if a borrower sends the servicer a sales contract and all the documents required by an Alternative Request for Approval of Short Sale (Alternative RASS), the servicer is supposed to evaluate that proposed contract and approve it, disapprove it or give a counter offer within 30 calendar days. Again, do not hold your breath when it gets close to the 30 days because you may turn extremely blue. The compliance with this time limit is improving, but do not promise your buyer that there will be an answer in 30 days because most of the time the buyer will be disappointed. However, these time limits should increase the number of HAFA short sales because more buyers will be willing to wait for the approval if it comes in a shorter time.

Realtors were not doing short sales because they are much more work, then at the end of the process the lenders would steal the Realtor’s commission. HAFA created regulations that the lenders could not touch the commission if it was six percent or less. So, the lenders hired consultants and contractors to do some of the work required by HAFA and charged the cost of that work to the Realtor’s commission. The new regulations prohibit this theft of the commission that the Realtor has earned.

If you want to read the complete regulations and the revision to the short sale manual that the lenders use, go to .

These amendment to the regulations allow more borrowers to qualify for HAFA, let more vacant properties be considered for HAFA, allow more flexibility in negotiating with junior lien holders, set time limits for the lenders to respond and eliminate a practice of charging the Realtor for contractors hired by the servicer. These changes not only increase the number of people and houses that qualify for HAFA, they encourage a a quicker response and fair compensation so that more real estate agents will be willing to work with a HAFA short sale. The additional flexibility in negotiating with junior lien holders should allow for more negotiations to be successful and increase the number of short sales that close. Things are moving in the right direction.

Fannie and Freddie’s HAFA Program: Good News and Bad News

June 2, 2010 by  
Filed under Short Sale How To

New Born HAFA GuidelinesFannie Mae and Freddie Mac loans were exempt from the HAFA short sale program that was put into effect by the Treasury on April 5, 2010. Fannie Mae has just created its own version of HAFA with regulations that you can find at Similarly, Freddie Mac has created its version of HAFA with regulations you can read at .

Does this addition to HAFA make you happy? In general, the terms are similar to the Treasury’s short sale program that is supposed to expedite the review and approval of short sales by pre-approving the seler for the short sale and establishing the amount the lender will accept at the time the Short Sale Agreement (SSA) is entered into. In other words, you qualify the seller and get the amount needed from the sale at the time you list the property. However, there is a difference with Fannie and Freddie. With the Treasury’s program, the lender considering the short payoff may tell the Realtor how much they will settle for. For those of you who do a lot of short sales, they will specify the amount they want to be paid at closing as shown on line 504 of the HUD.

In the Fannie and Freddie program, the servicer is prohibited from telling the seller, buyer and Realtor what this amount is. Instead, the servicer will establish an asking price based on the condition of the market in the area. Who is better at setting an asking price: (1) the Realtor who works there every day or (2) a Loss Mitigation negotiator with files from all over America? When the contract is submitted, you hope that this asking price results in the Minimum Acceptable Net Proceeds (MANP). If you do HAFA short sales, you have to love the acronyms 🙂 .

Having the Broker Price Opinion or appraisal already done at the time the offer is presented is a benefit, and the servicer does not tell the Realtor what the acceptable net proceeds are in most of the non-HAFA short sales (except for FHA short sales where you know to the penny). So, in this manner the program gives a benefit of the BPO already being done and the same result as the old fashioned short sale where you play “guess again” on the amount the lender wants. But, it could have been better if Fannie and Freddie followed the Treasury’s lead.

The other bad news is that the servicer tells the Realtor how to market the property, and supervises the marketing plan. Again, who knows better what will work (1) the Realtor who has developed an effective program or (2) the loss mitigation negotiator who just took the HAFA training course. The guidelines mandate that the marketing program includes ” a “For Sale” sign, Multiple Listing Service(s), flyers, print ads, open houses as well as appropriate usage of the internet;” Few will argue with a for sale sign and putting it in the MLS, but open houses work less than 2% of the time according to NAR statistics. Print ads have dramatically fallen because they are not that effective. However, if you want to comply with the Short Sale Agreement you will do these things, because the agreement can be cancelled if you violate it.

Another problem is that a seller cannot be considered for a Fannie or Freddie HAFA short sale if a foreclosure is pending that could sell the property in 60 days, or if the state laws would allow a foreclosure in the next 60 days. States like Texas can go from a dead start to a full foreclosure in less than 60 days, so does that mean you cannot do a Fannnie or Freddie HAFA short sale in those states?

There are some great benefits. The servicer must respond to an offer within 10 business days. That beats the months of waiting we do now. The servicer must allow at least 45 days to close the sale after approval, with a maximum of 60 days. Also the foreclosure must be postponed during the sale period, which is at least 120 days.

The financial incentives are similar. The seller gets $3,000 in moviing assistance. The servicer gets more under Fannie and Freddie than the Treasury by receiving $2,200 for an approved short sale, as opposed to $1,500 for the Treasury.

So, like everything else in short sales, there is some good news and some bad news. But, at least there is a program that provides some tools that a savy Realtor can use to help a borrower in trouble.

For the complete Fannie Mae guidelines go to and for the Freddie Mac guidelines go to

Chose a Trained Agent to Rescue You with a Short Sale

May 31, 2010 by  
Filed under Featured

Choose an Experienced Agent to Rescue You with a Short Sale

An experienced agent will save you with a sale that relieves all your debt.

« Previous PageNext Page »

Powered by WishList Member - Membership Software