Short Sales Resource

Make sure if you are going to do a “short sale” on your home that you have an agent that knows what they are doing and has your best interest in mind. You are still the owner of the property. I had an agent in my office tell me today that when he went to preview a home for a potential buyer the seller was there. The seller started telling him things that were wrong with the house, as my agent acknowledge those things the seller proceeded to tell my agent that HIS agent told him NOT TO TELL PEOPLE all the things that were wrong with the home. He didn’t feel right about this and that is why he was sharing it with my agent (and he was right in doing so). Folks this is not a foreclosure and you as the seller are still responsible to tell about any problems with the home. DON’T SET YOURSELF UP FOR A POTENTIAL LAWSUIT.  It is called disclose, disclose, disclose!  Should your agent not have you sign all the disclosure paperwork then you know something is wrong.  If you have more questions about your “Short Sale” don’t hesitate to contact me at www.fastneasyshortsale.com

Saving HAMP–HAFA May be the New Push to Speed up Bank Losses

HAMP, or the Home Affordable Modification Program, is the government program Obama announced later last year that makes available $75 billion in funding to help 3-4 million homeowners at risk for foreclosure stay in their homes.

It was designed to allow eligible mortgagees lower their monthly payments to 31% of their pre-tax income, or lower, through a loan modification.  Modifying the home loan must equal net more value than foreclosing would.

However, it has only resulted in 116,000 permanent loan modifications according to a Treasury Department report on February 17th.

Wait, wasn’t their goal 4 million by December 2012? They have some catching up to do!

According to the report, 57% of the permanent modifications were for borrowers who are suffering from unemployment or diminished income. The report also highlights 830,000+ trial loan modifications that are currently under way.

So, it took a year to modify only 2.9% of the goal. Boy, they have a long way to go. As far as refinancing programs go: Fannie Mae and Freddie Mac, according to the Treasury, have refinanced more than 4 million loans. One out of every 5 homeowners are “upside-down” or have negative equity according to Zillow’s report released February 10.

The refinancing program allows those with Fannie or Freddie loans who have this problem to lower their interest rates. Taking the country’s overall foreclosure stats into consideration in comparison to the few that have received assistance, there are millions of homeowners who need options besides modifications or refinance. A short sale may be the best alternative for one out of every 5 homeowners who find themselves in a “must-sell” situation.

In lieu of these findings, a new government push to clean up bad home loans could dent bank earnings because the industry may have to take losses on the assets sooner than some investors expect.

The new effort, called Home Affordable Foreclosure Alternatives, or HAFA, kicks in April 5. Some banking and real estate industry experts see it as a response to the limited success of HAMP

“The administration wouldn’t want to categorize it this way, but HAFA is an acknowledgement that a lot of loans won’t meet the criteria for a HAMP modification — even a trial one,” said Rick Sharga, senior vice president at RealtyTrac, which compiles data on foreclosures.

Slumping house prices and surging unemployment have triggered a wave of foreclosures that will continue washing over the U.S. banking industry for a few more years.

There could be foreclosure filings on 3 million to 3.5 million homes in 2010, according to RealtyTrac. There were a record 2.8 million homes with at least one foreclosure filing in 2009, the firm recently reported. Foreclosure activity will likely remain high until at least the end of 2012.

Foreclosures would probably have been higher last year if not for government and industry efforts to cushion the impact, including HAMP and state legislation extending the process.

HAMPered

Under HAMP, over 1 million homeowners have started trial modifications, which reduce monthly mortgage payments. However, less than 116,000 homeowners have a permanent modification under the program.

“HAMP hasn’t worked,” Nancy Bush, president of bank industry research firm NAB Research, said. “It’s just a massive expense of time and money.”

Wells Fargo /quotes/comstock/13*!wfc/quotes/nls/wfc (WFC 29.07, +0.09, +0.31%) has 15,000 people working on HAMP, she noted. In a recent meeting with Wells Fargo executives Bush said she asked when the program might end.

“They just shrugged their shoulders and said maybe never,” Bush said. “The expense of that is huge. HAMP may turn out to be the most expensive thing the banking industry has ever done.”

HAFA go

Under the new HAFA program, if a homeowner doesn’t qualify for a HAMP modification they must be offered a short sale. Borrowers can also be offered a deed in lieu of foreclosure.

Homeowners who qualified for a HAMP modification, but have missed two consecutive payments, will also be offered a short sale or deed in lieu through HAFA.

A short sale happens when the borrower and the mortgage servicer agree to sell a home for less than the value of the loan or loans. A deed in lieu of foreclosure occurs when a homeowner voluntarily gives the deed of the property to the servicer.

To kick-start HAFA, there are government incentives. Borrowers get $1,500 to help them move to a new home and up to $3,000 in short sale proceeds can be given to holders of second mortgages on the homes in the program