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
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