Short Sales under the HAFA Program

With an Upside Down real estate market, the Short Sale has become a fully focused reality of life today in “Real Estate”. This reality stretches into the very fabric of real estate warfare as Agents, Brokerages and the “Mine the Miners” industries sow to captivate the coming explosion of market share.

The National Association of Realtors (NAR) has made no challenges to the notion that in the coming 2 years, up to 70% of the action will be engulfed in pre-foreclosure and distressed property sales. In a recent Zillow report, it was disclosed the over 21% of the nations mortgages are connected to properties that are “Upside Down”.

The numbers of situations sited in these Short Sale projections do not include the numbers of homeowners who are within the 5% equity bracket. These are the marginal cases where the closing costs of sale represent the tip out of balance, and into that ‘Upside Down’ world of economical hardship.

While the promise of the HAMP and HAFA plans make good sense in a recovering economy, the challenges of implementation are so far reaching that its April 5th, 2010 effective date has itself, compromised the meaning or definition of the word ‘effective’. The originating steps to Lender compliance to the rules of HAFA gave exemption for certain groups to devise their own set of guidelines provided that were congruent with the overall mission of HAFA. Now June, the industry still awaits the formal release of guidelines to be announced by both Freddie Mac and Fannie Mae, the two largest insurers of mortgages in the USA.

You can ask a thousand Realtors of their experiences with Short Sales and the common syllabuses ’will include ‘long waits, unclear procedures, elusive guidelines and a continuous staging of the depressive wake of negative mindset, over their own plights of keeping up with the jones's.

Trying to get a short sale approved is a challenge with no certainty of a successful outcome. With differences in servicer requirements, varying attentions to a pre-listing investigation and decision-making time frames, the path to righteousness in the Short Sales process remains elusive to most engaging in the process. Each servicer, each transaction, varies on a case-to-case basis.

The challenges for the industry today is to becoming more familiar with the HAFA program, be ready for action when implementation takes hold later this year and getting back into some of the basics the majority of Agents have trained themselves to bypass. Most of us understand the meaning of “reading between the lines”, though in the world of short sales, those meanings equated “Too much hassle” for the investment of time it takes, then only to hurry up and wait.

There is another way and more coming as we turn to the next chapter, so keep the eyes open.

Copyright © 2010 Bryan Ridgley


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