New Short Sale Guidelines

Let’s get to the truth about the New Short Sale Guidelines…

There have been a surge in posts and articles written by Real Estate Agents and the media regarding the new HAFA program; the streamlining Short Sales Program rolled out by the U.S. Treasury Department.

Many of the posts on this topic rang strong with hope for a faster closing time. I will be writing a set of articles along with this one that will go over all of the points in the 43 pages of guidelines and forms. There is just too much to put in one post.

Whenever I see a group of people complaining and wanting something to be changed I want to take a step back to see the big picture. One sentence comes to mind often, ” Be careful what you ask for.”

NAR, Realtors® and homeowners around the country shouted, petitioned, discussed, wrote and spoke to their representatives about how long short sales take and how the banks don’t seem willing to do them and that they don’t know what they are doing.

My first question is:

Who says that being a professional small business in Real Estate was going to be a walk in the park? And what makes a business where there is no ceiling, low entry level and can create success beyond one’s wildest dreams also expected to be easy. Real estate is one of the highest stress careers but you can have a big pay day.

My second question is:

How many Real Estate Agents who wrote these posts of the blissful future of short sales actually read all 43 pages of the guidelines and forms?

I was tempted to write about HAFA but decided that I better understand HAFA and form an opinion based on facts- the facts that are written in these guidelines. So I spent 8 hours yesterday studying these guidelines and speaking with attorneys about them to get their opinions.

On the NAR website under the HAFA section it states:

“HAFA is a complex program, with 43 pages of guidelines and forms, designed to simplify and streamline use of short sales and deeds-in-lieu of foreclosure.”

Do you see the oxymoron? How do you place the words, COMPLEX and SIMPLIFY in the same sentence?

The first rumor that I want to dispel is that all the short sales are now going to go smoothly. That is NOT the case.

These guidelines are complicated to say the least, there are a lot of ifs, ands, and buts going on here.

The second rumor that I want to dispel is that all short sale lenders will have to answer your request for a short sale within 10 days.

This is NOT the case ALL the time and in ALL situations.

These guidelines are NOT for Fannie and Freddie owned loans. Fannie Mae and Freddie Mac will be coming out with their own set of guidelines in the coming weeks.
The guidelines only pertain to servicers who are in the HAMP program now, or those who enroll in the HAMP program. Servicers must offer the HAMP program first before they offer the HAFA program.

The HAFA program is only for:

* Principal Residences
* First mortgages
* The mortgage is delinquent or will be delinquent in the foreseeable future.
* The unpaid balance is less than $729,750.
* The monthly mortgage payment is more than 31 percent of the borrower’s gross income.

The third rumor that I want to dispel is that this is going to happen right now. NOT TRUE.

This program begins on April 5, 2010 and servicers have until December 31st of this year to opt in to the program.
However, servicers may opt to begin the program at any time before April 5, 2010 as long as they can implement a record keeping system.

The fourth rumor that I want to dispel is that all the lenders are now under these guidelines.

The HAFA program is not LAW. The US Treasury rolled out these guidelines to go along with the HAMP program.

This part really gets me!

“The Treasury has selected Freddie Mac to serve as its’ compliance agent for HAFA.”

You mean the same Freddie Mac that was involved with the huge accounting and fraud scandals?

According to the Chicago Tribune Freddie Mac executives “devised a plan to use accounting tricks to mislead shareholders about outsize profits the government-chartered firm was then reaping from risky investments. The goal was to push earnings onto the books in future years, ensuring that Freddie Mac would appear profitable on paper for years to come and helping maximize annual bonuses for company brass.”

We believe in adding value to our sellers. We are good at negotiating short sales. Short sales are much more about good negotiating skills than anything else and programs like these tend to tie our hands in applying our negotiation skills.

We will take longer short sale times with approvals any day over shorter short sale response times that come back with a Rejection mark on them in order to fulfill their accountability time frames.

We close 98% of ALL of our short sale listings and other agents do also. If we can do it, then you can too. If you are not closing above 80% of your short sale listings than you need to learn negotiating skills. Negotiating skills is what brings value to your clients and your business. Stay tuned for more details on the HAFA guidelines and forms- consider subscribing to our blog to be alerted of new articles.

This information courtesy of Katerina Gusset of International Properties Investments, Inc.