HAFA Short Sales Cost Treasury Department $4.3M

Based on a Congressional Oversight Panel report, it seems the Treasury Department has already paid out investors and servicers a whopping $4.3M as incentives as part of the Home Affordable Foreclosure Alternative or HAFA program. The said program was launched last April and designed to benefit distressed borrowers who were not able to qualify for the loan modification program.

The HAMP program, meanwhile, was under fire again as it delivered underwhelming figures. The chairman of the COP, Senator Ted Kaufman believes these subprograms under HAMP were not able to put a dent on the foreclosure mess.

In their defense, the Treasury Department pointed out that the incentive program set a standard for future programs, particularly those involving short sale transactions which come with very complicated and lengthy process. In fact, the sellers, buyers and agents involved usually suffer from many delays and other headaches.

In addition, the Treasury Department also believes the success of these programs is not felt immediately since they will still need some time before they are really up and running.

The controversial incentive program involves the Treasury paying $1500 to servicers who will agree to a short sale and as much as $2000 for mortgage investors who will allow a maximum of $6000 from the proceeds to be distributed to secondary lien holders. In addition, Treasury will also pay $3000 to borrowers as relocation assistance.

Based on the said figures and with over $4.3 million spent, the Treasury has actually assisted about 661 short sale transaction in the last eight months. Each short sale roughly costs about $6500. Meanwhile, the Special Inspector General for the Troubled Asset Relief Program has cleared 343 short sales as of September 30.

It is indeed frustrating to see how little the federal government has accomplished in its struggle to put an end to the foreclosure crisis. For many, it is a case of too little, too late and one can only hope the housing market has reached rock bottom in order for true recovery to start.


Top 5 Florida Short Sale FAQ

Considering Florida has one of the highest foreclosure rates in the nation, it should not come as a surprise why a lot of distressed homeowners or borrowers are looking into a short sale in order to avoid having to go through a nasty foreclosure. Here are the top 5 most frequently asked questions to help you understand this foreclosure alternative:
What is a Florida Short Sale?

If you find yourself owing more in mortgage debt than what your home is worth, you are said to be underwater and a perfect candidate for a short sale. The transaction will require the lender’s approval since they are the one who will be suffering some losses after agreeing to your proposal of selling your home and in exchange, you are rid of your mortgage debt.
Is the lender obligated to accept the selling price?

If you do decide to accept an offer based on the contract or selling price set, you need to understand the lender has the discretion to accept or reject the offer. Usually, the lender will get a Broker Price Opinion and see if your selling price is within the property’s market value. If the lender thinks you can sell the property for more, then you should expect a counter offer.
What does the seller need to do to get short sale approval?

For starters, you need to comply with the usual short sale requirements including documents such as, proof of your current financial status, income tax returns, bank statements, pay stubs and the very crucial hardship letter. Keep in mind banks have forensic accountants who will try and determine if you really can no longer afford your mortgage.
Why is the approval taking so long?

The collapse of the housing market was unexpected and most banks are just in over their heads when it comes to processing short sale applications. The fastest way you can get approved is by meeting all the requirements. You need to hire a short sale Realtor who will ensure everything is in order and will even check on the buyer to update them on the status of the application.
What happens to the mortgage deficiency?

There is just no guarantee the lender will waive their right to file for deficiency judgment. There are cases when the lender will require the seller to provide them with unsecured notes while there are times when they would simply waive such right and even put this in writing. It would be best to hire a short sale Attorney to negotiate this particular point with the lender.

Writing the Short Sale Hardship Letter

Distressed homeowners looking to avoid foreclosure by submitting a short sale proposal to their lender needs to understand the importance of writing a good hardship letter. You have to put yourself in the bank’s shoes and determine if you are worth the risk.

In addition to being honest and straightforward, the hardship letter should also be detailed and compelling. This is certainly not the time to feel ashamed of your true financial situation. Of course, you should not make your story a literary piece, just make sure you provide the three basics: the why, how, and what.

The Why
In your hardship letter, you must be able to make clear the reason you can no longer afford your home. Among the top reasons which could put you in such deep financial mess include a death in the immediate family, serious illness, job transfer or loss and divorce.

The What
To support your reason for the mortgage default, you should be able to provide details such as when the problem started. You need to provide your lender all the facts and make sure the chain of events is stated clearly.

The How
Of course, the bank should also see how you tried to solve your financial problem and avoid defaulting. You could include in your hardship letter the sale of your belongings, borrowing of money from friends and family, taking up a second job or even applying for a loan modification. If your lender finds out you did all you can do to avoid your current situation, they would likely have an easier time approving your short sale proposal.

Lastly, you must be able to prove to your lender your financial difficulties are here to stay. Provide documents of your current income, list of liabilities and assets and other pertinent document to show that even in the future, you will not be able to pay your mortgage. If you give the lender just one small hint you can actually pay your mortgage, your home could be foreclosed quicker. Hire a short sale Realtor for it will make all things a lot easier.

Short Sale Sellers: What You Need to Do

It cannot be denied the housing market is going through some tough times. For short sale sellers, it is even tougher. Market conditions are certainly not in your favor and you have to deal with the fact lenders usually sit on short sale proposals even if they are already dealing with a large inventory of foreclosed properties.

As a seller, there are plenty of things you can do to make sure the short sale goes as smoothly as possible. The following tips are just some of the tried and tested techniques in the industry. Although they may not guarantee lender approval, it would not hurt to try them especially if it means fewer headaches.

Hire a Team of Qualified Professionals. The short sale process is already complicated as it is and it would certainly work to your advantage if you have a team of experts, which include a short sale Realtor, taking care of the littlest details. It is challenging to find such professionals especially with the growing popularity of short sale transactions these days. Of course, there are still those unscrupulous individuals who are looking to take advantage of distressed homeowners like you, so you should be doubly-cautious. Among the things you can expect these professionals to provide are comparative market analysis, negotiation services and listings services.

Start Gathering Documents. The most important part of a short sale proposal is ensuring all documents required by the lender are ready to be submitted even before the first offer comes in. These documents include the listings and purchase contract agreement, proof of income, list of assets and liabilities, income tax and the hardship letter. This way, you only have to deal with the buyer and not become distracted with paperwork.

Have Realistic Expectations. Although a short sale could provide you with a solution to your immediate mortgage problems, it does not mean it will solve everything. For instance, the lender could still ask you to pay the difference between the mortgage debt and the proceeds of the sale and even if the lender forgives the debt, there are still tax issues to contend with for 2nd home owners and investment properties. At this point, it would again be better if you have your short sale Realtor and a real estate attorney helping you sort things out.

More Short Sale Buyer Tips

With the housing market still on the verge of recovery, a lot of homebuyers are pleased with the large selection of homes they can choose from. Not only are they looking at newly built properties or existing homes for sale, but they are also checking out repossessed houses and short sale homes.

Obviously, short sale properties are more popular than foreclosures if you are looking for an affordable home. Usually, they are in good physical condition since the seller is still living there and trying to fight off the foreclosure. Before you start hunting for one of these short sale houses, you need to understand the entire sales process can be lengthy and frustrating. You might suffer from headaches if you fail to consider these tips:

Look for a Short Sale Professional: although it would be easy to find a property being sold via a short sale transaction, it would still be better if you hire someone who knows the ins and outs of the sales process. It would certainly not merely involve you making an offer, but you will also need to do comparative market studies to see if your offer is reasonable, submit a proof of your capacity to pay cash or a mortgage, among others.

Lower Expectations. Even if you are already keen on a particular short sale property, you need to realize the lender will have the final say on the matter. You should not expect your offer to be immediately accepted, unless you are lucky and you are likely to negotiate the selling price especially if the lender finds it too low.

Look for properties with Single Liens. The more loan servicers or creditors in the story then the longer the short sale transaction will take. When buying a condominium, you should find out if the association dues are up to date so you will not be surprised when the HOA comes knocking.

Get Pre Approved. Obtaining financing for a short sale home is the same as any other home purchase transaction. This means if you want the seller and the lender to take you seriously, you need to get mortgage preapproval from your bank.

Looking for Cheap Luxurious Homes? Consider Short Sale Properties

The Palm Beach County housing market seem to be looking up especially in terms of sales involving condos and houses with $1 million or even more price tags. This is the first time in 9 months that such activity happened. Compared to 2009 figures from the county real property appraiser, there was a 13 percent increase in sales transaction.

According to experts, the growing demand for high-end homes does not translate to a boom. In fact, a ritzy mansion is attracting home buyers both locally and internationally because of its discounted prices. For example, a Ranch Colony estate was initially listed at about $15 million but was purchased for just $10 million.

It is evident from this that homebuyers and investors are simply taking advantage of their upper hand and the fact it is a buyer’s market at present. If you have the money and is in no hurry, you might even want to consider buying a property whose owner is considering a short sale.

Yes, you might have heard horror stories about the complications involved in short sale proposals and you might think twice. If you are able to provide the seller proof of your financial credibility and the short sale Realtor that you and the seller is working with knows what he or she is doing, then you are in good hands.

Short sale properties are definitely cheaper if you consider the fact the seller is looking to avoid foreclosure by asking the lender to accept the proceeds of the home sale, which is less than what is owed in mortgage. Of course, you need to do your homework since you do not want to find out at the end of the day, you will be paying more than you expected. This could happen especially if you do not watch out for hidden costs, which usually come if you signed the sales contract without reading it carefully or consulting a real estate lawyer who is an expert in short sale transactions.