As I have been commonly ‘on the fence’ about HAFA and its promise as a solution or deception upon a devastated America, one positive about HAFA does ring true. All lien holders in the HAFA sale must agree to close the books and not seek deficiency judgments from the borrower. In the otherwise ‘Traditional’ short sale approval models, once the sale closes and unless otherwise stated, the Banks have 4 years to seek and consider going after Short Sale borrowers for these deficiencies.
Under Obama’s “Making Home Affordable”, The HAFA program (still in its infancy) is the prize among many Californians who will be able to ward off having to defend claims for deficiency by debt holders looking to recapture substantial losses. This is spoken through the logic of the Trust Deed as legally defined and is at the heart of California’s Home Mortgage origination style. Simply put, Lenders cannot seek deficiency on Purchase Money loans.
Who else loves HAFA for the above reasons? Realtors® do.
It has been a challenge for the real estate industry to accept and mitigate the glue that attaches itself to sales closings like a ball and chain. This matter of potential liability in the event of deficiency claims from lenders against borrowers has been a concern to both responsible Brokers and to their Risk Management staff. The scenario moves quickly from the initial delivery of complaint on the borrower to a claim against the real estate office. The Borrowers statements go anywhere from “Our Agent didn’t warn us” to “Our Agent told us this would be legally safe”.
This is the best reason why I teach Agents to be extremely risk management oriented by delivering personal communications to our Clients, memorializing that we DID advise them to obtain legal and tax counseling. What may always remain in the life of real estate, are the many Clients who will just NOT DO IT!
One difficult question Realtors must take lightly when asked is “Is a Short Sale the best thing for me?” What is unfortunate is that many in the real estate industry are attending classes’ in Short Sales, tooling up greater market share, learning whatever they can in a perplexing expertise, riddled in misfortune, lacking in oversight and with twilight time periods for guidelines. The greater concern here might be ‘How can I safely navigate through all this and prosper financially’? I hope prosperity is part of our goals.
Here is the best tip I can offer my students, clients and colleagues today in the world of Short Sale and HAFA. While 3 out of 4 Attorneys I have spoken to have sided with Bankruptcy as the best scenario for possibly 2 out of 3 pre-foreclosure borrowers, I sought out to meet my new best friend. Since the matter of 3rd party Short Sale Negotiators has become prevalent in the industry and another potentially legal suicide, I found the perfect referral resource in the services of Price Law Group in Los Angeles. I am going to say why, though I also want to qualify it with the addition that I am about supporting “Prosperity”, and NOT ‘a pure soul should not make money’ consciousness. That is ridiculous. Real Estate Agents are Professionals that deserve to be as prosperous as any other Professional. I believe that in integrity selling, it is that commitment to the greater good of the Client that will orchestrate the successes, which will follow an organized plan.
My soapbox on third party Negotiators or coordinators will continue to bark at an un-sheltering sky. The arena is full of everything from licensing issues and total incompetence to ethical and MLS infringements worth denouncing. What I want for my clients is what is best for them, period! Real Estate is also a referral business. When I have a pre-foreclosure Client call a firm like Price Law, they are first of all, calling the largest Bankruptcy firm in California, Second of all, they have an exponentially fitting ‘free consultation’ that will document your legal referral, help the client determine what might actually be best. When it is determined that the Client is ripe for Short Sale, You now have one of the most respected Law Firms willing and able to facilitate your Short Sale as the Third Party Negotiators while your job as the Agent can really be about the services you provide expertly and the growth of your business.
While I certainly didn’t invent the wise words “Do the right thing” and “See you at the TOP”, these are the root of my teachings in real estate training, coaching and seminars. I always invite interested parties to contact me personally for more information.
Copyright © 2010
Bryan Ridgley
Monday, August 30, 2010
Friday, August 20, 2010
Is HAFA a SCAM on A Distressed America?
HYPE, Government misguided efforts, ?
Right feels left and left, right this morning, so my first HAFA point is that HAFA Requires the Deed in Lou Agreement as part of it’s so called wisdom and ordinary manner. This part of the process is passed over like the air conditioning feature in the new Ford Fiesta at the Vegas dealerships hot August clearance sale.
HAFA may require that the homeowner continues to pay up to 31% of their gross income to their senior lien holder. (Junior lien holders excluded). This means that once the distressed borrower applies and is awarded, they may have to resume payments on their mortgage.
HAFA makes no provision for securing any agreements with junior lien holders or judgment debt holders as part of their preapproval short sale program. This means that if the homeowner does not have a professional Realtor following them through the HAMP process and pre-negotiate their junior liens prior to the HAFA application, their exist some predetermined sticky wickets that are natural barriers to the closing steps. A large percentage of these sales will fall out and these distressed homeowners will for in all intensive purposes be placed on the streets.
It also requires the signed authorization and agreement for the deed in Lou of foreclosure which can be activated if they miss a payment provision. Under ordinary circumstances, these distressed homeowners can stay in their home for an additional 90 plus 21 days if the lender foreclosed under the traditional Notice of Default and Trustee Sale process. It is kind of like saying, “hey distressed homeowner, rather than you staying in your home with no payment under the traditional short sale process without your being able to continue to stay throughout the traditional foreclosure process, we will allow you the opportunity to suffer a myriad of red tape, forms and deadlines for your reinstating some form of payments and agreeing that if you miss one of these payments, you will turn over your deed and vacate the premises immediately”
Further, “In exchange for all this hassle, we will divert your first lien holder’s ability to go after you in the future for any deficiency judgment right they may have under the traditional short pay process, however, you are on your own with regard to junior lien holders”
Short Sales are in fact no different than a traditional sale with the exception that the property is financially upside down and the sale must be subject to the Sellers lender to approve the debt imbalance. Everything else about these sales are no different, The Seller is still obligated to disclose defects to the buyer and the buyer is still on notice to and should have the opportunity to investigate the condition of the property. The ‘blood on the street’ rule need more apply as we must add the factors which expose both the greedy and unethical. Legal and ethical challenges ensue as the brokerage industry navigates through the potential deficiency possibilities distressed homeowners may face which can easily allow brokers to be more culpable in cross complaints; both negligence and misrepresentation.
I state in many of my Short Sale Seminars, articles and consulting to Realtors nationwide, to invest in the education necessary to circumvent these stop gaps from happening to their prospects and Clients before the process begins. Many legal soothsayers, perhaps along with myself are predicting another new potential litigation wave against the real estate industry and brokerages as a result of what these distressed homeowners may state was “so called, our professional advice: in helping them with these timely short sale mitigation options. The fact is real estate brokerages pay dearly for expensive E&O (Errors and Omissions) insurance policies and appear to be the only ‘deep pocket’ left above ground after a real estate sale transaction has closed escrow. Most Plaintiff Attorneys know that when it comes to the average value of a nuisance claim is within the grasp of the Brokerages deductable of their E&O policy, they will usually be encourages to settle the case without admitting to any guilt.
Real Estate Agents may now register for a Short Sale and HAFA coaching program that offers both ‘Skyrocketing Income’ measures and Risk Management consulting. Contact Bryan Ridgley at bkr@pacbell.net for more information and to “Jumpstart” your bank deposits!
Bryan Ridgley
Copyright © 2010
Bookmark & Share
Right feels left and left, right this morning, so my first HAFA point is that HAFA Requires the Deed in Lou Agreement as part of it’s so called wisdom and ordinary manner. This part of the process is passed over like the air conditioning feature in the new Ford Fiesta at the Vegas dealerships hot August clearance sale.
HAFA may require that the homeowner continues to pay up to 31% of their gross income to their senior lien holder. (Junior lien holders excluded). This means that once the distressed borrower applies and is awarded, they may have to resume payments on their mortgage.
HAFA makes no provision for securing any agreements with junior lien holders or judgment debt holders as part of their preapproval short sale program. This means that if the homeowner does not have a professional Realtor following them through the HAMP process and pre-negotiate their junior liens prior to the HAFA application, their exist some predetermined sticky wickets that are natural barriers to the closing steps. A large percentage of these sales will fall out and these distressed homeowners will for in all intensive purposes be placed on the streets.
It also requires the signed authorization and agreement for the deed in Lou of foreclosure which can be activated if they miss a payment provision. Under ordinary circumstances, these distressed homeowners can stay in their home for an additional 90 plus 21 days if the lender foreclosed under the traditional Notice of Default and Trustee Sale process. It is kind of like saying, “hey distressed homeowner, rather than you staying in your home with no payment under the traditional short sale process without your being able to continue to stay throughout the traditional foreclosure process, we will allow you the opportunity to suffer a myriad of red tape, forms and deadlines for your reinstating some form of payments and agreeing that if you miss one of these payments, you will turn over your deed and vacate the premises immediately”
Further, “In exchange for all this hassle, we will divert your first lien holder’s ability to go after you in the future for any deficiency judgment right they may have under the traditional short pay process, however, you are on your own with regard to junior lien holders”
Short Sales are in fact no different than a traditional sale with the exception that the property is financially upside down and the sale must be subject to the Sellers lender to approve the debt imbalance. Everything else about these sales are no different, The Seller is still obligated to disclose defects to the buyer and the buyer is still on notice to and should have the opportunity to investigate the condition of the property. The ‘blood on the street’ rule need more apply as we must add the factors which expose both the greedy and unethical. Legal and ethical challenges ensue as the brokerage industry navigates through the potential deficiency possibilities distressed homeowners may face which can easily allow brokers to be more culpable in cross complaints; both negligence and misrepresentation.
I state in many of my Short Sale Seminars, articles and consulting to Realtors nationwide, to invest in the education necessary to circumvent these stop gaps from happening to their prospects and Clients before the process begins. Many legal soothsayers, perhaps along with myself are predicting another new potential litigation wave against the real estate industry and brokerages as a result of what these distressed homeowners may state was “so called, our professional advice: in helping them with these timely short sale mitigation options. The fact is real estate brokerages pay dearly for expensive E&O (Errors and Omissions) insurance policies and appear to be the only ‘deep pocket’ left above ground after a real estate sale transaction has closed escrow. Most Plaintiff Attorneys know that when it comes to the average value of a nuisance claim is within the grasp of the Brokerages deductable of their E&O policy, they will usually be encourages to settle the case without admitting to any guilt.
Real Estate Agents may now register for a Short Sale and HAFA coaching program that offers both ‘Skyrocketing Income’ measures and Risk Management consulting. Contact Bryan Ridgley at bkr@pacbell.net for more information and to “Jumpstart” your bank deposits!
Bryan Ridgley
Copyright © 2010
Bookmark & Share
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