Short sales are in general no longer the excruciatingly long and uncertain process they were in the near past. Efforts by lenders and the federal government have been shortening and simplifying the process, mainly because they recognize that it’s less expensive and a better approach for homeowners and lenders.
The federal HAFA, Home Affordable Foreclosure Alternatives, program provides incentives, including $3000 in relocation assistance for homeowners who complete a short sale. Some lenders are also providing incentives. Instead of the old “react to the offer” approach, lenders have created short sale programs to help homeowners who can no longer afford their payments or remain in their homes. So, what should buyers look out for or be aware of in the short sale process?
- Who owns the lien, and are there subordinate liens on the property, such as second or even third mortgage holders.
- Can all of the parties involved come to an agreement on the true market value of the property? If a real estate agent is involved, they may have given the owner a value, then there’s the investor buyer who comes in with their own valuation. Finally, the lender must agree, or there’s no deal. Sometimes either an agent or the investor can work with conflicting value estimates by adjustments or just better selection of comparable properties.
- There is a lot of documentation and paperwork involved:
>Letter of Authorization authorizing the agent or buyer to speak for the homeowner.
>If listed, a copy of the listing agreement.
>Purchase contract.
>Estimated/Final HUD-1 Settlement Statement.
>2nd lien approval letter, letters for all subordinate liens.
>Hardship documentation.
>Owner financial information, assets, liabilities, bank accounts, etc.
- If it’s a HAFA short sale, the borrower must have been qualified for participation. Once that happens, the lender will be proactive in the process. Once an offer has been accepted, there can generally be a closing within 45 days or sooner.
“Short sale” is no longer a process lenders want to avoid. It is helping to reduce foreclosure inventories, and lenders are becoming much more amenable to the offer and process.
Who is Dean Graziosi?
Are People Actually Successful?
Does Dean Practice What He Preaches?
What Deals Are The Students Doing Right Now?
New HAFA Guidelines
Here's an interesting article on HAFA for anyone who is thinking about buying a short sale; it'll make it a bit easier for the homeowner to relocate.
Valerie
New HAFA Guidelines Effective Feb. 1, 2011
"The Obama Administration’s HAFA short sale program has been in effect since April 5, 2010 and was created in an attempt to encourage lenders to do short sales and prevent homes from going to foreclosure.
Since its inception, however, only 661 HAFA short sales have been completed nationwide – a fraction of the number the Treasury Department and the Obama Administration had hoped for.
Effective February 1, 2011, the federal HAFA short sale guidelines will be amended in an effort to include more borrowers in the HAFA program and therefore reduce the number of homes in the United States that will go to foreclosure.
HAFA or Home Affordable Foreclosure Alternatives program is a joint government & lender program which allocates both a $3,000 incentive for borrowers who complete a successful short sale, as well as up to $6,000 to go to the 2nd lien holder in the short sale. It also specifies that the 2nd lender will not pursue a deficiency against the borrower.
The primary change in the HAFA program is the elimination of the debt to income hardship requirement for borrowers. Previously, in order to qualify for a HAFA short sale, the mortgage payment on the first mortgage had to exceed 31% of the seller’s gross monthly income.
This financial hardship requirement has now been removed, so sellers who wish to do a HAFA short sale will no longer need to meet any arbitrary income or financial hardship ratio, which should dramatically broaden the spectrum of borrowers who will qualify for the HAFA short sale program"
DG FAM ...Any short sales leads?
Hay there DG Fam! I can outsource your short sales leads and we can split the referal fee. The company has many years experience and most the time can close the short sale in as little as 30 days. They are highly successfully and reputable. Lets make some CHACHING$$ TOGETHER...PM ME.
THANKS!!
Cb
UNLESS your investor is
UNLESS your investor is Fannie Mae or Freddie Mac!
("They" do not subscribe to the above ammendment)!
Believe me-I've tried! I've just spent the last 6 months trying to qualify thru BAC for HAFA simply for the RELO assist at closing (my banckruptcy took care of the remainder balance of the mortgage).
I was passed thru 3 different companies (forget what they are referred to-servicing companies maybe?) that gather the info from homeowners to be submitted to the bank. The first rejection was clearly a joke (no kidding) When I asked to appeal the determination, I was bounced to the second company instead, where after re-starting the entire process AGAIN, I was rejected due to the income/debt ratio reason. When I stated they could not do that d/t the new the ammendment to HAFA (stated above) they flipped me to a third servicer! Why? Because now that I had an OFFER on the house, they could no longer work on my account! If I had NOT had an offer, then they would have retained my accout. When the third company did the same thing, I was informed (by my realtor)that BAC had made a HUGE mistake!
What could THAT possibly be? Well "I" was a Fanny M loan!! So what? I've been a FM loan the ENTIRE time!
Well, I was told. You should have never be evaluated by those companies! Freddie and Fanny are evaluated by separate servicing companies b/c Freddie and Fannie use different criteria to determine income/debt ratio!!
In fact, they don't really use that I/D ratio formula.
THEY use income to MORTGAGE payment ratio! They use you GROSS salary against your monthly payment to determine the 31% rule (not any of your other debt or savings (or lack of) ect.)
It was the most ridiculous run around I have ever been a part of-a comedy of stalling tactics, if you ask me. The three stooges could not have done ANY better....
I actually wondered if in their monday morning meetings, the various management teams tried to out do each other, with the most creative BS lines to give to these poor home owners while they literally passed them around to each other like a bunch of musical chairs.
I saved the best for last. Wanna know why they rejected me the first time?
"Well it looks like the notes on your file state that you said you had a court date?"
"Yes, I did say that I thought I did on my very first call in to you. But BAC told me I was wrong and has assurred me repeatedly that no such date exists anywhere in their data banks nor in their attorneys notes"! I've check with three different depts. at BAC to be sure."
I'm sorry Maam, that's just what the notes say!
So Good Luck....
I've finally told BAC that the RELO assist does NOT have to come from HAFA anyway. I know they, like MANY banks now, have their own funds with which to assist homeowners at close (if they want to!). In some cases, it's referred to as a Coop or HAFA Coop program.
I've let BAC know that after that mess they just put me thru, I wanted THEM to provide RELO funding at close instead, and to make it part of their new purchase agreement. That was three weeks ago...
No word yet....
BTW, if anyone wants to see a copy of the addendum they are using to prohibit REI's from purchasing their homes, I have a copy of that too. Will post it here if I can-maybe you've already seen these though.
ML
....and here's the rest of the story (it's bit long though!)
http://www.deangraziosi.com/blog-post/divinehandmaiden/my-first-blog-eve...
ADDENDUM to purchase agreement for BAC
this was an ADOBE doc with names on it that I could not edit out. SO I copied to a word doc instead, and did the best that I could. You will see discepancies thruout-BUT will still get the gist of the message here. Not sure how ANYONE here can possibly get around this, given the business models that are used on this site by DG? IF anyone knows how to WORKAROUND this-please share, will you?
THE KEY POINTS to consider are NUMBERED below: ESPECIALLY # 7-10!!!
I personally would love to short sell this house to anyone here with a decent offer...
ML
LMO 503-3 -SS Purchase Contract Addendum
Bank of Americata torn* lSLT)(-?03 BankofAmerica2nd
Seller:
Buyer:
Seller:
Buyer:
Seller:
Buyer:
This Addendum to Purchase Contract is entered into and is effective as of LlLJlJ by and between, Seller(s),
Buyer(s) Seller('s') Broker/Agent and Buyer('s') Broker/Agent (herein after lefegedJg and shall be as"theParties")
deemed to amend, andsupplement Conhact g!_lSJlL Selle(s)and
modify that certain Dated by and between
Buye(s)(the "Purchase Contract").
in consideration benefits
Addendumand ofthe representations, and promises acknowledged, Buyers
NOW, THEREFORE, of the mutual to be derived from this Short Sale Purchase Contract
warranties,conditions hereinafter Sellers,
and Broker hereby agree as follows:
1.The Parties acknowledge and agree that the Subject Property is being sold in "as is" condition.
2.The parties acknowledge and agree that the Seller may cancel this agreement prior to the ending date of the
contract period without advanced notice to the broker, and without payment of a commission of any other
consideration,if the property is conveyed via foreclosure to the mortgage insurer or the mortgage holder.
The Parties acknowledge and agree that the Subject Property must be sold throughan 'Arm's Length"
Transaction.Arm'sLength means two unrelated parties characterized by a selling price and other terms and
conditions that would prevail in a typical real estate sales transaction.
No partyto this contract is a family member, related by blood or marriage, business associate, or shares a business interest with the mortgagor
(Sellers).
The Parties acknowledge and agree that neither the Buyers, or Sellers, nor their respective Brokers/Agents
haveany agreements written or oral that will permit the Seller or the Seller's family member to remain in the
property as renters or regain ownership of said property at any time after the execution of the Short Sale
transaction.
This includes if the seller is retaining a direct or indirect ownership or possessory interest in the
property,and/or have a formal or informal option to obtain such as interest in the future.
Seller agrees to vacate the subject property within 1 days PRIOR TO closing of the transaction OR Seller
agrees to vacate the subject property within days after closing subject to terms as shown on the purchase
contract.
6.The Parties acknowledge and agree that none of the parties shall receive any proceeds from this transaction
except approved sales commissions.
7.The Parties acknowledgeand agree the purchase contract cannot have any provisions for Assignment /
Assignee and / or Option to purchase.Bank of America will NOT approve any transactions with these sales
contract provisions and any such provisions are expressly deemed unapproved.
8.Buyeragrees that property cannot be sold or otherwise transferred within 30 days of closing;.
9.The Parties acknowledge and agree that upon Bank of America's request the Parties shall provide all material
documents involved in the short payoff transaction,including but not limited to, the Buyer(s)' and Seller(s')
HUD-1Settlement Statements.
10. The Parties acknowledge and agree that this Short Sale transaction will not constitute appraisal fraud, flipping,
identity theft and/or straw buying.
11. The Parties acknowledge and agree that any misrepresentation or deliberate omission of fact that would induce
the Bank of America, lnvestor or a Mortgage Insurer to agree to the terms of a short payoff which would not
have been approved had all facts been known, constitutes Short Sale Fraud and may subject the responsible
Partyto civil and/or criminal liability.
12. The Parties acknowledge and agree that this Addendum together with the Sales Contract shall constitute the
entire and sole agreernent between the Parties with respect to the Sale of the Subject propertyand supersede
any prioragreements, negotiations, understandings, optional contracts, or other matters whether oral or written,
with respect to the subject matter hereof.
To the extent that any term or condition contained within the Short
SaleContract is contradictory or inconsistent with this Addendum, the Parties agree that this Addendum shall
supersede.
No alternations, modifications, or waiver of any provisionhereof shall be valid unless in writing and
signed by Parties, FHA, VA, governmentagencies, any Investor, and/or mortgage holder, hereto.
lN WITNESS WHEREOF, the partieshereby have acknowleged the terms and conditions contained in this Addendum
as evidenced by the signatures appearing below;
Seller:
Buyer
Seller:
Buyer:
Seller:
Buyer
Seller:
Buyer:
LMO-503-3-04201
Realtor/ BrokerListing Agent Certification
Subjectto and including theterms andcondition lontainedin the attached Short Sale Purchase Contract
A{de4duml$qlle(s') estate ngent-TOPY f t (XtTT and Buyer ('s')Broker/Real Agent
Broker/Real Estate
W ftfl.2C il-Et|fr.ta-(hereinafterreferredto as "Brokers"')furtheracknowledgeand agree as follows:
1 .
Brokers' hereby acknowledged andagreethatBank of America is not the propertyseller,but only themortgage
lien holder (s)or alternatively Serviceractingonbehalfof the lien holder, acceptingless that the balance owed
to facilitate theShort Sale purchasetransactionof above said propertyas an alternative to foreclosure. Bankof
Americaiq in no way responsible / Broker since that is the sole
forListingor Buyer Realtor salescommissions,
responsibility seller under the terms of the listing agreement.
of the property
2.
Brokershereby acknowledge and agree that Brokers are activelylicensed and in goodstanding by the
appropriateauthoritywithin the State that thepropertyis listed for sale,or a licensed Attorney in goodstanding
inthe State where the propertyis listed for sale.
3.
Selle/s Broker acknowledge and agree that the subjectpropertyhas been listed on the local Multiple Listing
Service at fair market value to provideopen market competitivebids to presentto seller as perthe terms of
seller / agent listing agreement and that the marketing is in fact and "inspirit" seeking to maximize theselling
priceof the property.
4.
Selle/s Broker acknowledge that Seller has beenpresentedwith all offers to purchasehome from this open
markel listing, and seller has selectedlhe buyer of said transaction at the sales priceterms disclosed and
agreedto within thepurchaseconkact.
5.
Brokers'acknowledge understandings relatingto the
and agree that there are no agjreements, of contracts
current sale or subsequentsale that have not been disclosedto propertysellerand Bank of America as the
mortgagelien holder or Servicer on behalf of the Lien holder
6. Brokers' andagreethatSeller, Buyer or Brokers have not received, directlyor
acknowledge nor will receive
indirectlyany form of compensation the official aspresentedin the purchasecontract
outside terms of closing
and what will be presentedinthepreliminary HUD-1 settlement
andcertified closing statement
7. Brokers' and agree that they have disclosed any relationship or
acknowledge to Bank of America to the buyer
ownershipinterestin the buyer's company,or represents that Listing Realtor/Broker business
has no existing
relationship
withbuyer.
acknowledge or omission
tocivil and/or criminalliabilitv.
8. Brokers and agree that that anymisrepresentation may subject the responsible Party
ListingBroker/RealtorAgent:
Agent:
Buye('s')Broker/Realtor
StateLicense ? >-Number:State License
Date:
Date:
LMO-503-3-04201