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.
Menifee, CA · Member since 2008 · 194 posts · 46 votes
16y
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.
Real Estate Investor · Bradenton, FL · Member since 2009 · 99 posts · 42 votes
16y
Found some more information on it.
* Who
o Must be the homeowner’s principal residence.
o The homeowner is delinquent on the mortgage, or default is imminent
o The loan was made before Jan. 1 this year and is less than $729,750
o The borrowers’ total monthly mortgage payment exceeds 31 percent of their pre-tax income
* What
o Deadlines
o Standardized Paperwork
o $1000 to lenders
o $1500 to sellers for moving costs
o Up to $3k for subordinate lienholders
o No foreclosure can occur during the short sale agreement period
o Mortgage servicers may not lower real estate agent commissions
* When
o April 2010
Terrence, I think you are right. What is the buy-in for this? I haven't figured that out yet. Is $1000 enough for lenders as an incentive? It sure sounds good on the surface.
Investor / Agent · NY, NY · Member since 2009 · 97 posts · 20 votes
16y
I have got to say that I completely agree with Terrance and Nick that the incentive are not going to be enough to make the banks move their butts into gear, but I we must admit that the acknowledgement is a step in the right direction. This course of action is very similar to the modification initiative which is not completely successful but a little helpful for those who have benefited from it thus far. I think that this is a sign of some change for the short sale process and legislation to come.
Real Estate Investor · Vero Beach, FL · Member since 2008 · 268 posts · 89 votes
16y
Let me ad a couple more things. The HAFA program will only work unless the servicer is going to register and comply with the program. They must be offered the workout first and qualify for the 31% ratio. Most of my short sales here lately have been from people that have lost job and loss of income and would not qualify under the program. The people who engage the HAMP program can move straight to short sale or DIL without going through the trial period.
The 90 day provision has got me stumped. Makes me think away around it, but I am still thinking about it.
I think the program is going to support a lot of real estate agents because it does lock in sales commissions. They don't say anything else about 3rd party fees except what is considered normal closing costs.
Real Estate Broker · Jacksonville FL & Middletown, CT · Member since 2008 · 1k+ posts · 633 votes
16y
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.
Residential Real Estate Agent · Warrenton, VA · Member since 2010 · 1 post · 0 votes
16y
. I thought you would get a big kick out of page 11 of 43 where throughout the entire document you are saying “Thank God it is finally in writing†and then you see “Mortgage Insurerâ€. Here is where the entire document goes to crap! If the mortgage insurer does NOT waive their right to collect whether by promissory note or cash contribution than the entire short sale or DIL does not qualify for these simplified rules. Let me know your thoughts. I think we are going to see a whole lot of problems with the MI companies killing short sales and DIL’s. To me it shows that the legislation is too far behind what is currently happening in the market.
Centennial, CO · Member since 2009 · 758 posts · 251 votes
16y
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
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
16y
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
Real Estate Consultant · Lakewood, CO · Member since 2009 · 69 posts · 23 votes
16y
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!
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
16y
Hi, have irons in the fire, but my windows for the blind couple will be comming. On the severcier not cutting the RE commission...but they can require the realtor expenses to pay for management/services. so if the place get winterized by a third party, that can come out of the agreed commission. They sliped that one in there! Bill
Rental Property Investor · Raleigh, NC · Member since 2009 · 76 posts · 2 votes
16y
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.
Centennial, CO · Member since 2009 · 758 posts · 251 votes
16y
Hey Justin, I have skimmed the HAMP whitepaper, but not read every bit of it. Yes, some good and some bad. They would help their own cause if they eliminated th 90 day flip rule, like FHA has done. 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.
Rental Property Investor · Raleigh, NC · Member since 2009 · 76 posts · 2 votes
16y
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).
Centennial, CO · Member since 2009 · 758 posts · 251 votes
16y
Thanks Justin, I had heard that the GSE's had to follow the parameters, which makes sense since it is promulgated by Treasury. That language may be there because it does require an opt-in by banks wishing to participate. I appreciate the response.
Centennial, CO · Member since 2009 · 758 posts · 251 votes
16y
I was on a webinar with one of the gurus that mentioned GSE's are subject to it. I have not verified that but worth checking into. Non-GSE's have to elect to opt-in to the program.