New Obama Administration Guidelines Speed Up Short Sales

New Obama Administration Guidelines Speed Up Short Sales?

Short sales do not damage neighborhoods to the same extent as foreclosures.  At least that seems to be the motivation behind new guidelines adopted by the Obama administration that are supposed to streamline the short sale process for troubled borrowers.  Short sale homes usually do not sit vacant in a neighborhood and are not exposed to vandalism.  Also, short sales sell for a higher dollar amount than foreclosures.  But, short sales are complex and time consuming so buyers have been avoiding them.

Home Affordable Foreclosure Alternatives Program (HAFA). The meat of the program is as follows:

1. Borrowers will receive $1,500 from the government if they sell their homes for less than the amount of their mortgage loan.

2. Mortgage servicing companies completing a short sale will receive $1,000

3. Second-mortgage holders can receive up to $3,000 of the sales proceeds in exchange for releasing their liens

4. Investors holding liens will receive $1,000 for releasing the liens.

Is it enough to make the lenders cooperate.  I sincerely doubt it but I am hopeful.  The predecessor Home Affordable Modification Program has completely failed to stimulate the housing recovery and I think HAFA may fall short of accomplishing the task as well.

Home Affordable Modification Program (HAMP). HAFA is part of the 75 billion dollar Home Affordable Modification Program (HAMP) which has largely been a bust.  Troubled Homeowners were supposed to be able to have their loans modified so they could afford the payments.  One of the big problems is you have to be employed to qualify.  Also, the lenders have not been cooperative and it is easier to be appointed the ambassador to China than to get all the paperwork approved.  HAFA is the latest directive aimed at propping up the housing market.

HAFA ELIGIBILITY

“In accordance with the provisions of Supplemental Directive 09-01, a loan meets the basic eligibility criteria if all of the following conditions are met:

The property is the borrower’s principal residence;

The mortgage loan is a first lien mortgage originated on or before January 1, 2009;

The mortgage is delinquent or default is reasonably foreseeable;

The current unpaid principal balance is equal to or less than $729,7501; and

The borrower’s total monthly mortgage payment (as defined in Supplemental Directive 09-01) exceeds 31 percent of the borrower’s gross income.”

HAFA GUIDELINES

There are many guidelines.  Here are are few of the ones that I find most important: 

• A requirement that the property be listed with a licensed real estate professional who is regularly doing business in the community where the property is located.

• Either a list price approved by the servicer or the acceptable sale proceeds, expressed as a net amount after subtracting allowable costs that the servicer will accept from the transaction.

• The amount of the real estate commission that may be paid, not to exceed 6% of the contract sales price,

• An agreement that upon successful closing of a short sale acceptable to the servicer, the borrower will be released from all liability for repayment of the first mortgage debt.

• An agreement that upon successful closing of a short sale acceptable to the servicer the borrower will be entitled to a relocation incentive of $1,500, which will be deducted from the gross sale proceeds at closing.

Link to United States Treasury Department Supplemental Directive 09-09  This is a detailed and full account of Directive 09-09

SALLY ENGLISH AND THE ENGLISH TEAM ARE READY TO HELP YOU WITH YOUR SHORT SALE

If you are having trouble making your monthly mortgage payment and are considering selling your Metro Atlanta Georgia home, give us a call.  We have successfully completed the short sale process for distressed home owners in the metro Atlanta region.  The process is complex and we can coach you through the process.  We can help you avoid foreclosure.  Call us at 404-229-2995.