BiggerPockets

Not sure if everyone saw this but Reuters had a big article yesterday on short sales.

http://www.reuters.com/article/bondsNews/idUSN3046464720091130

Some highlights:
1. Subordinate lien holders have a cap of $3000
2. Borrowers receive $1500 in relocation expenses
3. Incentives to the bank and to the investor
4. 10 day window to accept the short sale by the bank
5. The borrower must be fully released from the debt
6. Prohibits mortgage servicers from reducing agent commissions

What do you guys all think of this? I tried to find the actual legislation this morning but only found earlier HAMP information that pertained more to loan modifications for homeowners, not short sale scenarios. I'll look again later this morning.

Yeah, I'm not too sure about that either. It would be nice to get these things done faster, but I'm not sure it will happen anytime soon. Plus we will be seeing another decline & more defaults, which will compound the problem.

Under the HAFA program they also are setting terms where the buyer of the short sale cannot transfer title (sell) for 90 days after.

Originally posted by Jonathan Rexford

Under the HAFA program they also are setting terms where the buyer of the short sale cannot transfer title (sell) for 90 days after.

Good catch, I didn't see that at all. That's certainly a negative for anyone playing the flipping game.

The entire 43 pages of guidelines can be found here
https://www.hmpadmin.com/portal/docs/hamp_servicer/sd0909.pdf
The guidelines are certainly highly un-investor friendly in my opinion.
I'm not even crazy about them as an agent.
In theory the timelines sound great, but if you have worked an FHA short sale, this looks like more of the same.
MOST servicers are signing on for this from what I understand.
I think it will ultimately lead to more DIL's than anything else.
Whenever government steps in to "streamline", things generally get worse not better IMO.

Good responses by Jonathan and Donna. Regarding Donna - MI companies have been and are likely to continue to be the fly in the ointment, and the regulations do not address or compensate them. Overall the regulations are good in that they try to speed the process and especially because they require full release of the Homeowner. For Jonathan the 90 day no-flip requirements are troublesome and kill the possibility of using short term Transactional Funding. One possible way around it - negotiate the short then try to buy the Note, use Transactional Funding or your own funds for that purchase, then flip to the end buyer. The 90 day no-flip is interesting with FHA just waiving their 90 day lending restriction for a year. Another example of the left hand and right hand not being in sync with the other. :D

Hi, as Ted pointed out and as I have advocated before, buying the note in the first place is much simpler, IMO. Any subordinate loan could then pay me off at par or we can go from there. I have a funny story I'll explain sometime on a blind couple who had a window contractor put a second on a home and how I just got rid of the second.
As a subordinate holder, $3,000 may not cut it as it would depend on the equity left. Thanks for bringing this up! Bill

I totally agree with Ted on this. BUY THE NOTE. As far as a previous poster said about

a. The banks being understaffed. The real problem is not that the Lenders don't have enough employee's. It simply that 80% of the offers are BS and the Loss Mitigation Dept. has to weed through the bad files to find the good one's.

B. Mountain's of paperwork? Not really the problem is that the Lenders want there paperwork and what they ask for Nothing more and nothing less. So many people are sending in worthless paperwork and wondering why they are not getting done. I had one person submit a file in a 3 ring binder. They sent the file to me that way as well. I returned to sender. NEWS FLASH! THERE IS NO WAY I AM READING ALL THAT!! AND NEITHER IS THE LENDER!

Make things simple send them there doc's and what they want. Send out clean deals nothing fancy NO BS No option contracts, and or assigns, No trusts. Serious if you want to get deals done DO THEM RIGHT!

I just read through that whole HAMP whitepaper. Some good, some bad, but all points to buying the note rather than the deed. Though I think that's where most of us are stumped. Short sale negotiation and double closing is all over the place and can be understand by searching and reading, though I can't find much about note buying. Anyone care to help me out?

BTW, all the HAMP stuff only applies to non-Fannie Mae or Freddie Mac loans.

Originally posted by Ted Akers

I was under the impression that GSE's (FNMA and Freddie) had to participate and that it is an opt-in program for the banks.

First page, last paragraph: This Supplemental Directive provides guidance to servicers for adoption and implementation of HAFA for first lien mortgage loans that are not owned or guaranteed by Fannie Mae or Freddie Mac (Non-GSE Mortgages).