Wednesday, November 28, 2012

Treasury streamlines HAFA Short Sale Program

The U.S. Treasury Dept. this week announced new guidelines to streamline and standardize the HAFA Short Sale Program, which provides a $3,000 relocation incentive for qualified homeowners.
Among the changes, Treasury’s Supplemental Directive 12-07 to the Making Home Affordable Program shortened the decision timeline to “essentially 30 days,” in line with new Fannie Mae and Freddie Mac short sale rules, and will not require financial documentation from some distressed homeowners.
Major changes to the HAFA program include:
PRE-DETERMINED HARDSHIP: Borrowers with 90-plus-day delinquencies and a FICO score below 620 will be classified as having a “pre-determined hardship” with less required documentation.
Homeowners who meet the criteria will only need to complete a Hardship Affidavit to be considered for HAFA approval. The current Request for Mortgage Assistance (RMA) form qualifies as a Hardship Affidavit, Treasury says.
QUICKER ANSWERS: Servicers now have essentially 30 days to approve, reject or counter a HAFA short sale offer.
For pre-approved HAFA short sales, in which the applicant has been prequalified for the program:
If an offer meets the minimum price and terms of a pre-approved HAFA short sale, the servicer must issue the approval within 10 business days of receiving the offer. Offers less than the pre-approved terms must be acknowledged with an approval, rejection or intent to counter-offer within 10 business days of receipt, and the counter-offer must be generated within 30 calendar days.
Servicers can accept lower offers “so long as the proposed sale is in the best interests of the Investor,” according to the MHA guidelines.
For offers sent without a pre-approval:
The bank must acknowledge receipt of a complete offer within 10 business days. If the seller is more than 90 days delinquent on their mortgage and has a credit score less than 620, the servicer must issue a short sale approval, rejection or counter-offer within 30 calendar days.
For borrowers who are not three months behind and/or have credit scores above 620, the 30-day clock doesn’t start until the servicer receives a Hardship Affidavit completed by the seller and the buyer.
In either case, the servicer can extend the 30-day window but must give written updates every 15 days until it reaches a resolution.
EVERYONE SIGNS OFF: The buyer in a HAFA short sale will now be required to sign a new Hardship Affidavit in which they affirm that the sale is an “arm’s-length transaction” and they are not giving the seller any compensation.
Previously, only the seller and real estate agents were required to acknowledge the arm’s-length requirement.
LENDER BENEFIT: Treasury has increased the reimbursement to the lender for permitting part of the sale proceeds to pay junior lienholders, making the program more attractive for the banks.
For HAFA short sales closed on or after Dec. 1, 2012, the first-mortgage lienholder will be reimbursed up to $5,000 of the $8,500 that it allows to a junior lien, such as a home equity line of credit or other second mortgage.
That amount increases from the previous maximum of $2,000.
SHORT SALE LEASE-BACK:  supplemental directive adds the following specific language to the Making Home Affordable handbook: “The terms of any sale approved by the servicer that provides an option for the property to be sold to a non-profit organization with the stated purpose that the property will be rented or sold to the borrower.”
In March 2011, Treasury first referred to this groundbreaking initiative in Supplement Directive 11-02, which introduced the concept to servicers. Servicers subsequently did nothing to implement the option in their HAFA guidelines.
Other companies inspired by Treasury’s foresight recently launched programs in California. (Do you qualify for the new Short Sale Lease-Back Program? Call 951-778-9700 today for an interview.)
Supplement Directive 12-07 now may open the door a bit further for this type of short sale.
INVESTOR PURCHASES: HAFA currently prohibits a buyer form reselling a home within 90 days of the HAFA transaction. That time restriction has been shortened to 30 days, though a resale for 20 percent more than the previous purchase price would have to wait at least 90 days.
The new short sale rules — which do not apply to loans owned or backed by Fannie Mae, Freddie Mac, the Veterans Administration (VA), the Dept. of Agriculture’s Rural Housing Service or the Federal Housing Administration (FHA) — kick in Feb. 1, 2013, though servicers can implement them immediately. A short sale occurs when a home is sold for less than is owed on it and the bank discounts the payoff.
The HAFA Program earlier this year was extended through the end of 2013. HAFA requests must be submitted to a servicer by Dec. 31, 2013, and the transaction must be closed on or before Sept. 30, 2014.
Do you qualify for the New HAFA Short Sale program?
Find out now by emailing Anna Mikaelyan, Certified Short Sale Consultant, directly at

Thursday, October 18, 2012

Short Sales Speed Ahead Causing 5-Year Low in Foreclosure Activity

A stronger economy and housing market and an increase in short sales brought foreclosure activity in California down to the lowest level since 2007, according to a report from San Diego-based DataQuick.
The number of residential properties entering the foreclosure process, or that received a Notice of Default (NoD), totaled 49,026 in the third quarter of this year, down from 10.2 percent and a steep 31.2 percent drop from the 2011 third quarter, DataQuick revealed.
The most recently quarterly figure is the lowest since the first quarter of 2007, when 46,760 NoDs were recorded. NoDs reached a high of 135,431 in the first quarter of 2009.
Short sales in California were up, accounting for 26 percent of resale activity in the third quarter, up from 24 percent in the previous quarter and 22.9 a year ago.
“[D]uring the past year, we’ve seen short sales overtake the foreclosure process as the procedure of choice to deal with homeowner distress. That may change after New Year’s because the temporary ‘debt forgiveness’ feature in the tax code is set to expire as part of the so-called ‘fiscal cliff’,” explained John Walsh, DataQuick president.
Foreclosure resales were down in the third quarter, accounting for 20 percent of all resale activity in the state. In the second quarter of this year, foreclosure resales accounted for 27.8 percent of all resale activity and 34.2 percent a year ago. At its peak, foreclosure resales reached 57.8 percent in the first quarter of 2009.

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2013 is the Year of Short Sales!

Even though the number of foreclosure filings has risen dramatically in recent months in some parts of the country—specifically in judicial states—the ratings agency DBRS expects total foreclosure filings to show evidence of a steady decline in 2013 when compared to 2012.
This is due to “the record number of servicers that are using short sales as their primary loss mitigation tool to prevent delinquent loans from entering foreclosure,” the agency’s analysts said in a research note issued Monday.
The Office of the Comptroller of the Currency (OCC) found evidence of such a shift as early as 2012’s first quarter. With the release of its Q1 mortgage performance report, the federal regulator noted that the number of home retention actions implemented over the January-to-March timeframe was down 36.7 percent from a year earlier, while the number of short sales increased 19.7 percent. 
New short sale actions completed during the first quarter of this year totaled 59,996, according to the OCC’s latest report covering about 60 percent of all first-lien mortgages in the United States. Over the second-quarter period, another 63,403 short sale actions were completed by the 60-percent subject population. 
While it will be another two-and-a-half months before theOCC releases its third-quarter mortgage performance data and mitigation numbers, anecdotal evidence from those in the field suggests the increase in short sales is likely to carry forward.  
Rudimentary projections based on the quarter-to-quarter increase seen earlier this year would mean another 138,000 completed short sales during the second half of 2012 among the 60-percent first-lien population analyzed by the OCC.
DBRS believes short sales will be an effective loss mitigation tool for curbing the industry’s shadow inventory backlog of unsold REO properties. Short sales are an effective way to get the home sold without having to incur the cost of foreclosure, preparing the home for sale, paying a listing agent, and maintaining the property, therefore lowering loss severity, the agency’s analysts noted.
As a result, DBRS expects short sales to be one of the key loss mitigation techniques used in 2013 with more servicers delegating or automating their acceptance and counter offer process in order to be more responsive to short sale bids on properties.
If you have any comments or questions about short sales, please email Anna Mikaelyan at or visit her website at 

California's Median Home Price at Four-Year High!

If you're still wondering if you should keep waiting for more price drops, wonder again!  
Interest rates are at an all-time LOW!  
According to Warren Buffet, investing into Single Family Homes is the smartest decisions Americans could make right now for their future.
The California Association of Realtors (C.A.R.) continued to report a shortage of inventory in September, which is limiting home sales but seems to be pushing up median home prices.
According to C.A.R., the median home price in California is now at the highest level in more than four years.
The statewide median price of an existing, single-family home reached $345,000 in September, up 0.3 percent from August’s $343,820 median price. The gain was also a 19.5 percent increase from September 2011, the highest yearly gain since May 2010 and the biggest gain overall since August 2008, when the median price was $352,730. For seven straight months now, prices have been increasing monthly and yearly.
Sales, on the other hand, fell in September, sinking 5.2 percent from a revised 510,910 in August and declined 1.2 percent from a revised 490,280 a year ago.
“Sales in the inland and coastal markets continue to move in different directions. Low inventory – especially in distressed areas – is dampening sales activity,” said C.A.R. President LeFrancis Arnold.
LeFrancis added, “The Inland Empire and the Central Valley have experienced double-digit sales declines compared with last year. Meanwhile, sales were higher in San Diego and most Bay Area counties, where the economies appear to be growing faster than the rest of the state.”
Housing inventory in September increased, but still stayed below the norm of a six- to seven-month supply. The Unsold Inventory Index for existing, single-family homes stood at 3.7 months in September, up from a revised 3.2 months in August and 5.3 months in a year ago, according to C.A.R.
“For the state, at 3.7 months of supply, unsold inventory is still less than half what it would be in a normal market,” said C.A.R. VP and chief economist Leslie Appleton-Young. 
Appleton-Young continued, explaining that a constrained supply at the moderate and lower end of the market has led to a nearly 28 percent drop in sales of homes priced under $200,000 and a more than 15 percent drop in sales for homes priced between $200,000 and $300,000. 
However, Appleton-Young said homes in the upper price range, where inventory isn’t as much of an issue, saw increases. “[S]ales of homes priced $400,000-$500,000 rose more than 14 percent, and those priced above $500,000 increased more than 15 percent,” she noted.

If you have any comments or questions about short sales, please email Anna Mikaelyan at or visit her website at 

Tuesday, September 25, 2012

Fast Help For Homeowners (FHFH) Act, H.R. 6153 Introduced To Speed Up Short Sales

Congressman Jerry McNerney (D-Stockton) introduced the Fast Help For Homeowners (FHFH) Act, H.R. 6153, to help speed up the short sale process, a necessary step to addressing the housing crisis.   McNerney’s bill was met with broad bipartisan support and industry endorsements.
“For far too long, the housing downturn has challenged our region.  My bill is one commonsense step we can take to help shore up the housing market and provide much-needed relief for homeowners.  Our region has been ground zero for the housing crisis, and I am committed to fighting for folks in our communities who have been hit hard,” said McNerney.
The Fast Help For Homeowners Act requires a second mortgage lender of a federal mortgage loan to review and make a decision on a short sale agreement within 45 days.  If the lender does not make a decision within that time frame, the short sale will be deemed approved on the 46th day.
Short sales can help both lenders and homeowners.  Often, it is far less costly for a lender to negotiate a short sale agreement than go through the foreclosure process.  A short sale is also less damaging to a homeowner’s credit score than a foreclosure.
The Fast Help For Homeowners Act has broad industry support, receiving the endorsements of the: National Association of Realtors; California Association of Realtors; Central Valley Association of Realtors; NeighborWorks Home Ownership Center, Sacramento Region; California Association of Real Estate Brokers (CAREB); and Stockton NID Housing Counseling Agency.
“The National Association of REALTORS applauds Congressman McNerney for his efforts to improve the short sale process and provide distressed homeowners an alternative to foreclosure.  NAR stands ready to collaborate with Congressman McNerney and Congress to enact legislation that will help homeowners stave off foreclosure.” – Maurice “Moe” Veissi, President of the National Association of REALTORS.
“C.A.R. applauds Congressman McNerney for introducing this common-sense piece of legislation.  California REALTORS® support the FHFH Act because it will require subordinate lien holders to respond to short sale offers in a fair and reasonable amount of time, ensuring distressed properties are brought to market and aiding in the recovery of the general economy.” – LeFrancis Arnold, President of the California Association of Realtors.

If you have any comments or questions about short sales, please email Anna Mikaelyan at or visit her website at