New HAFA Rules:

1. Apply to Short Sales.
2. The rules do not apply to loans that are backed by Freddie or Fannie ask the other agent before showing so you know if the rules apply to the house you are potentially looking at.
3. Will allow borrowers (current sellers) to receive pre-approved short sales terms before listing the property (include sales price from the bank).
4. Prohibits the banks from requiring a reduction in the real estate commission agreed upon in the listing agreement, up to 6%.
5. Requires borrowers to be fully released from future liability for the first mortgage debt and if the second receives an incentive under HAFA, that debt will also be released.
6. Financial incentives for relocation assistance ($1500), and up to $3000 to be distributed to subordinate lien holders.
7. Takes effect April 5, 2010 and sunsets December 31, 2012.

Time line:

• Notification from the servicer (bank)
  • If the borrower doesn’t qualify for HAMP (Homes Affordable Modification Program) the bank must consider borrower within 30 days after one of the following has been met:
    • Doesn’t qualify for trial period plan
    • Doesn’t successfully complete a HAMP trial period plan
    • Misses at least 2 consecutive payments
    • or Requests a short sale

• Borrower has 14 calendar days from the date of the short sale agreement to sign and return it to the bank.
  • The bank must give the borrower 120 days to sell the house (extensions permitted up to 12 months).

• Within 3 business days of receiving a fully executed offer from a purchaser the Agent/Borrower must submit a complete Request Approval of Short Sale to the bank.
• Ten business days after the bank has received the complete RASS they must approve or deny the request.
• The first mortgage lien must release the lien within 10 business days or earlier after receipt of sale. The investor (lender) must waive rights to see deficiency judgments and not require a promissory note for the deficiency.

These deadlines will push the banks to get houses sold and off their books.  These houses will now be competition to the traditional owner occupied sellers who, for the past 2 years, have had an advantage and I think it will help prices hold and not decrease because of the length of time on the market.  Time will tell.

If you didn’t understand the lingo above call or email me.   You need someone to help you navigate though our ever changing guidelines and someone who will listen to your needs, has the experience, tenacity, and kindness to get through a short sale.