The purpose of the government sponsored HAFA (Home Affordable Foreclosure Alternative) program is to simplify and streamline the short sale and DIL (Deed-in-lieu) process by providing a standard process flow, minimum performance timeframes and standard documentation.
However, in my recent experience with HAFA, simplify and streamline have been benched and their opposing teammates complicate and inefficient are on the field instead.
Here's what's occuring (adapted from an article written by Kevin Kravcak)
1. THE GOOD INTENTION: Servicers, in accordance with investor guidelines, determine if a short sale or DIL (deed in lieu of foreclosure) is in the best interest of the investor, guarantor and/or mortgage insurer.
THE NEGATIVE RESULT: It matters not what is in your sellers best interest but what is in the best interest of the investor/lender/insurance companies.
2. THE GOOD INTENTION: By signing the SSA, you are agreeing not only to a short sale but also to a deed‐in‐lieu of foreclosure if a short sale is not successful.
THE NEGATIVE RESULT: By signing the SSA, you are agreeing not only to a short sale but also to a deed‐in‐lieu of foreclosure if a short sale is not successful... keep reading...
3. THE GOOD INTENTION: You have up to 120 days to sell the property.
THE NEGATIVE RESULT: After the 120 days, the servicer may or may not agree to extend it for up to a year.
4. THE GOOD INTENTION: You can get a preapproved short sale when you list your home, no waiting for an approval.
THE NEGATIVE RESULT: When the seller signs the SSA (HAFA short sale agreement) they are agreeing up front to a DIL (see #2 above). The investor is obligated to accept a DIL in accordance with the terms of the SSA if the term of the SSA expires without resulting in a sale of the property - This means come day 120 the lender can exercise and enforce a DIL because the seller already agreed to it in writing. For those of you who don't know, a DIL is nothing more than a volunteered foreclosure. It will show on your credit as a foreclosure. This is not a benefit to you but it is to the lender because they get the property back in their possession faster thereby saving them money compared to making them go through a judicial foreclosure process.
5. THE GOOD INTENTION: Servicer Disclaimer – Servicer may provide a disclaimer related to any limitations of the information provided in the matrix as it relates to individual investor or mortgage insurance restrictions or additional program requirements.
THE NEGATIVE RESULT: Lay man's terms, this means Servicers may amend the terms of the SSA in accordance with investor requirements, or they can do whatever they please, and in most cases they do just that.
6. THE GOOD INTENTION: Your home is appraised up front!
THE NEGATIVE RESULT: The offer price will be dictated by the lender using the 90 day "as-is" BPO value. The servicer does not have to agree to additional valuation methods. Sellers better pray they get an experienced BPO agent because if they over value your property and it does not sell within 120 days because it is overpriced, you're stuck with a house that won't sell (price not negotiable) and so you just gave your property to the bank (see DIL #2 and #4 above).
Don't fret though as there is ONE good thing about HAFA. You can opt out of this program at any time! If the borrower fails to contact the servicer within the timeframe or at any time indicates that he or she is not interested in these options, the servicer has no further obligation to extend a HAFA offer. This means you can elect to perform what is now being referred to as a "proprietary" or "traditional" short sale (or a non HAFA short sale).
If you have help from a qualified experienced short sale professional, they will know all you have to do is put in your short sale package cover letter the words, "THIS IS TO BE A NON HAFA SHORT SALE." They will also have many ways to help you avoid having a foreclosure on your record, avoid agreeing to a DIL, avoid agreeing to deficiency judgements and avoid signing promissory notes.
Bottom line, HAFA is great for the lender/servicers but not so much for you, the homeowner/seller. This program will be a good fit for very few homeowners, if any at all.
Tuesday, September 13, 2011
Monday, September 12, 2011
Know What You Owe - Ready, Set, Get Outta Debt!
(This article courtesy of Feed the Pig. Copyright 2011 American Institute of Certified Public Accountants.)
Get Out of Debt
There's no time like the present to start on the path to get out of debt. Set aside some time to create an attack plan for lessening and eliminating your debt. Here are some tips to get you started.
Know what you owe. A major downfall in managing debt is not knowing exactly how much you owe. You may have a vague idea, and know approximately when your bills are due, but without knowing specifics you are more likely to run into trouble. Make a list or chart of all your current debt balances—all credit cards, loans, etc.—and note the date each payment is due every month. Keep it somewhere you will see it on a regular basis. Set up reminders for each bill due date on your phone or email to help ensure you make each payment on time.
Consider consolidating. Like many Americans, you may be carrying more than one form of debt, which can make it hard to manage, especially with multiple payment due dates. Consider debt consolidation, which allows you to combine your smaller loans into one larger loan, usually with a longer term and lower interest rate, resulting in one monthly payment. Consolidation has advantages and disadvantages depending on your individual situation, so talk to a financial professional, like a CPA, to see if consolidating your debt is right for you.
Reduce, reduce, reduce. A key strategy to managing and lessening your debt is to always reduce, never increase. It can be tempting to open another credit card when one is maxed out, but doing so will only make debt management more difficult. Instead, look for ways to adjust your spending habits to pay down the debt you already have. Make a goal to always pay more than the minimum payment due.
Don't hide. If you feel like your debt is spinning out of control and you don't know what to do, talk to a financial professional who can help get you back on track. You may also want to contact your creditors. Creditors will often work with you to come up with an alternate payment plan if you take the time to explain your situation.
Do you have a success story of how you managed your debt? Share it with us on the Feed the Pig Discussion Board. For more information on managing debt, click here.
Visit www.feedthepig.org for more money-saving tips.
Get Out of Debt
There's no time like the present to start on the path to get out of debt. Set aside some time to create an attack plan for lessening and eliminating your debt. Here are some tips to get you started.
Know what you owe. A major downfall in managing debt is not knowing exactly how much you owe. You may have a vague idea, and know approximately when your bills are due, but without knowing specifics you are more likely to run into trouble. Make a list or chart of all your current debt balances—all credit cards, loans, etc.—and note the date each payment is due every month. Keep it somewhere you will see it on a regular basis. Set up reminders for each bill due date on your phone or email to help ensure you make each payment on time.
Consider consolidating. Like many Americans, you may be carrying more than one form of debt, which can make it hard to manage, especially with multiple payment due dates. Consider debt consolidation, which allows you to combine your smaller loans into one larger loan, usually with a longer term and lower interest rate, resulting in one monthly payment. Consolidation has advantages and disadvantages depending on your individual situation, so talk to a financial professional, like a CPA, to see if consolidating your debt is right for you.
Reduce, reduce, reduce. A key strategy to managing and lessening your debt is to always reduce, never increase. It can be tempting to open another credit card when one is maxed out, but doing so will only make debt management more difficult. Instead, look for ways to adjust your spending habits to pay down the debt you already have. Make a goal to always pay more than the minimum payment due.
Don't hide. If you feel like your debt is spinning out of control and you don't know what to do, talk to a financial professional who can help get you back on track. You may also want to contact your creditors. Creditors will often work with you to come up with an alternate payment plan if you take the time to explain your situation.
Do you have a success story of how you managed your debt? Share it with us on the Feed the Pig Discussion Board. For more information on managing debt, click here.
Visit www.feedthepig.org for more money-saving tips.
Friday, September 9, 2011
What You Can Do If You Have Been Scammed In Real Estate
WHAT YOU CAN DO IF YOU HAVE BEEN SCAMMED (OR BECOME AWARE OF A LOAN MODIFICATION SCAM)? REPORT FRAUD AND FILE COMPLAINTS WITH --
1. The DRE if a real estate licensee is involved, or if the person or company is unlicensed. If the person or company is unlicensed, the DRE will file a Desist and Refrain Order. If the person or company is licensed, the DRE will commence disciplinary action, http://www.dre.ca.gov/cons_complaint.html.
2. The District Attorney, Sheriff, local police and local prosecutor in your community.
3. The California Attorney General, at www.ag.ca.gov/consumers/general.php.
4. The California State Bar if a lawyer is involved, or if an unlicensed person claims to be a lawyer at www.calbar.ca.gov.
5. The California Department of Corporations, at www.corp.ca.gov, if a loan modification claims to be operating under a California Finance Lender License.
6. The Federal Trade Commission, at www.ftc.gov. They have an excellent fact sheet on Foreclosure Rescue Scams.
7. Federal Bureau of Investigation (FBI), at www.fbi.gov.
8. HUD, at www.hud.gov.
9. The Federal Deposit Insurance Corporation (FDIC), at www.fdic.gov.
10. The Better Business Bureau in your community.
11. The Chamber of Commerce in your community.
12. File a Small Claims Court action. These are informal courts where disputes are resolved quickly and inexpensively by a judge. Since 2008, you can recover up to $7,500 in Small Claims Court. You represent yourself, and can request a judgment for money damages.If your judgment is based on fraud, misrepresentation, or deceit, or conversion of trust funds, and the judgment is against a real estate licensee, DRE has a Recovery Fund that may be able to pay your claim. Go to the DRE web site at www.dre.ca.gov, and look under the tab for “Consumers”. Also, the California Secretary of State has a “Victims of Corporate Fraud Compensation Fund” that provides restitution to victims of corporate fraud. Go to the Secretary of State’s web site at www.sos.ca.gov/vcfcf for more information.
(info above issued 3/2009 via www.dre.ca.gov)
1. The DRE if a real estate licensee is involved, or if the person or company is unlicensed. If the person or company is unlicensed, the DRE will file a Desist and Refrain Order. If the person or company is licensed, the DRE will commence disciplinary action, http://www.dre.ca.gov/cons_complaint.html.
2. The District Attorney, Sheriff, local police and local prosecutor in your community.
3. The California Attorney General, at www.ag.ca.gov/consumers/general.php.
4. The California State Bar if a lawyer is involved, or if an unlicensed person claims to be a lawyer at www.calbar.ca.gov.
5. The California Department of Corporations, at www.corp.ca.gov, if a loan modification claims to be operating under a California Finance Lender License.
6. The Federal Trade Commission, at www.ftc.gov. They have an excellent fact sheet on Foreclosure Rescue Scams.
7. Federal Bureau of Investigation (FBI), at www.fbi.gov.
8. HUD, at www.hud.gov.
9. The Federal Deposit Insurance Corporation (FDIC), at www.fdic.gov.
10. The Better Business Bureau in your community.
11. The Chamber of Commerce in your community.
12. File a Small Claims Court action. These are informal courts where disputes are resolved quickly and inexpensively by a judge. Since 2008, you can recover up to $7,500 in Small Claims Court. You represent yourself, and can request a judgment for money damages.If your judgment is based on fraud, misrepresentation, or deceit, or conversion of trust funds, and the judgment is against a real estate licensee, DRE has a Recovery Fund that may be able to pay your claim. Go to the DRE web site at www.dre.ca.gov, and look under the tab for “Consumers”. Also, the California Secretary of State has a “Victims of Corporate Fraud Compensation Fund” that provides restitution to victims of corporate fraud. Go to the Secretary of State’s web site at www.sos.ca.gov/vcfcf for more information.
(info above issued 3/2009 via www.dre.ca.gov)
Thursday, September 8, 2011
INDUSRTY UPDATE: Four Foreclosure Avoidance Programs Under "Keep Your Home California"
(Information taken from Keep Your Home California blog)
Cash-strapped homeowners who want to avoid foreclosure have four programs under Keep Your Home California, each with thousands of dollars available – and in some cases as much as $100,000.
The federally funded, state-run effort established the four programs after input from community leaders statewide. Quite simply, we wanted to know the best way to put almost $2 billion to work for low and moderate income families in the Golden State, from El Centro to Crescent City.
Each program caters to specific needs, such as jobless homeowners looking for help with the mortgage for a few months while they find work to those needing to reduce loan principal to make their payments work. And, like most efforts, you need to find the program that best fits your needs.
We’ll go over the basics of each of the four programs, but we strongly encourage you to contact our customer-service reps who can check if you are eligible, determine the best program for your needs and start the process.
Below is an overview – all the detailed information is available at www.KeepYourHomeCalifornia.org, including a seven-minute video on the process.
Also, please remember that some homeowners are eligible for multiple programs. When you apply and begin the process, representatives can answer questions about eligibility and determine if multiple programs – and more funds – are possible.
Unemployment Mortgage Assistance Program – Out of work and need some money for the mortgage payment? Well, maybe we can help. Keep Your Home California will provide as much as $3,000 or the combined monthly payment of principal, interest, taxes insurance and homeowners’ association dues, whichever is less, for a maximum of six months. Of course, there are some requirements, including that you must be receiving unemployment benefits from the California Employment Development Department.
Mortgage Reinstatement Assistance Program – Homeowners behind on their mortgage – including interest, taxes, insurance and homeowners’ association dues – can receive as much as $15,000 to help get back in step on the payments, a huge help for consumers with a short-term issue that affected their income. Homeowners must also prove they can afford the mortgage payment once it’s reinstated, otherwise we are creating a situation for failure – and that’s not good for anyone, from the homeowner to the lender. Some homeowners can combine this program with California Housing Finance Agency’s Loan Modification Program. More than $129 million has been earmarked for this program.
Principal Reduction Program – This program is like going on a fiscal diet, trimming your mortgage principal balance. How much of a cut to the mortgage principal depends on additional Keep Your Home California assistance funds (yes, you can get dollars from other programs mentioned above). Note: like all of our programs, your mortgage servicer must be participating in Keep Your Home California for this to work for you. Unfortunately, this program has been the most difficult to get mortgage servicers to participate in. Check our list of servicers to see if your servicer is participating.
Transitional Assistance Program – We realize that sometimes it’s best for people to transition to another type of housing. So, when it comes to getting back on track for homeowners who avoided foreclosure through a short sale or deed-in-lieu of foreclosure, maybe we can help. The Transitional Assistance Program offers as much as $5,000 for families to find a new place to live.
The information above is intended only as an overview. Their website, www.KeepYourHomeCalifornia.org, has all the details.
Or you can simply call one of their counselors at 888-954-5337 to get more information and check eligibility.
Cash-strapped homeowners who want to avoid foreclosure have four programs under Keep Your Home California, each with thousands of dollars available – and in some cases as much as $100,000.
The federally funded, state-run effort established the four programs after input from community leaders statewide. Quite simply, we wanted to know the best way to put almost $2 billion to work for low and moderate income families in the Golden State, from El Centro to Crescent City.
Each program caters to specific needs, such as jobless homeowners looking for help with the mortgage for a few months while they find work to those needing to reduce loan principal to make their payments work. And, like most efforts, you need to find the program that best fits your needs.
We’ll go over the basics of each of the four programs, but we strongly encourage you to contact our customer-service reps who can check if you are eligible, determine the best program for your needs and start the process.
Below is an overview – all the detailed information is available at www.KeepYourHomeCalifornia.org, including a seven-minute video on the process.
Also, please remember that some homeowners are eligible for multiple programs. When you apply and begin the process, representatives can answer questions about eligibility and determine if multiple programs – and more funds – are possible.
Unemployment Mortgage Assistance Program – Out of work and need some money for the mortgage payment? Well, maybe we can help. Keep Your Home California will provide as much as $3,000 or the combined monthly payment of principal, interest, taxes insurance and homeowners’ association dues, whichever is less, for a maximum of six months. Of course, there are some requirements, including that you must be receiving unemployment benefits from the California Employment Development Department.
Mortgage Reinstatement Assistance Program – Homeowners behind on their mortgage – including interest, taxes, insurance and homeowners’ association dues – can receive as much as $15,000 to help get back in step on the payments, a huge help for consumers with a short-term issue that affected their income. Homeowners must also prove they can afford the mortgage payment once it’s reinstated, otherwise we are creating a situation for failure – and that’s not good for anyone, from the homeowner to the lender. Some homeowners can combine this program with California Housing Finance Agency’s Loan Modification Program. More than $129 million has been earmarked for this program.
Principal Reduction Program – This program is like going on a fiscal diet, trimming your mortgage principal balance. How much of a cut to the mortgage principal depends on additional Keep Your Home California assistance funds (yes, you can get dollars from other programs mentioned above). Note: like all of our programs, your mortgage servicer must be participating in Keep Your Home California for this to work for you. Unfortunately, this program has been the most difficult to get mortgage servicers to participate in. Check our list of servicers to see if your servicer is participating.
Transitional Assistance Program – We realize that sometimes it’s best for people to transition to another type of housing. So, when it comes to getting back on track for homeowners who avoided foreclosure through a short sale or deed-in-lieu of foreclosure, maybe we can help. The Transitional Assistance Program offers as much as $5,000 for families to find a new place to live.
The information above is intended only as an overview. Their website, www.KeepYourHomeCalifornia.org, has all the details.
Or you can simply call one of their counselors at 888-954-5337 to get more information and check eligibility.
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