HAFA and More Changes to Short Sales

Wednesday, March 17th, 2010 | Uncategorized

After the NAR’s repeated requests that guidelines be created to provide some uniformity to the short sale process, the Obama Administration has released new rules set to go into affect on April 5th.

Yes…it’s another shift in the short sale landscape, but how momentous?

For those with a rosier outlook, this could mean fewer foreclosures in 2010, and a plan of action for distressed homeowners that is clear and decisive. It could also help to stabilize communities and values.

For those who are skeptical… Foreclosures are down because banks are holding back on processing them, homeowners will still have to depend on the banks (who can decide if they want to participate), and as for housing values…it’s about jobs. With parts of California hitting over 20 percent unemployment, housing values aren’t coming back soon. Same with the rest of the U.S.

The good news, I think… real estate agents will be expected to know and understand the short sale process. The waters shouldn’t be as muddy, which will make the process easier to understand. This should make collaboration between investors and real estate agents more productive.

You should check it out for yourself here. (Don’t worry, this link is a quick read.)

Some additional observations:

For those of us working the short sale niche for several years, we know that the industry is always in transition. While this is true of traditional residential real estate, short sales have more moving parts.
Properties with 2nd liens will probably not qualify as both lenders need to agree and the 2nds are expected to ask the buyer to contribute (but this may not be in the interest of the HAFA design).
This is supposed to speed up the process and since the lenders will give a settlement in full, sellers will be enticed by the bank –– which will save the bank thousands on court costs.
For investors, this will probably mean that available properties will be 2 lien properties or the rehab typed that would normally be held for 90 days.
Since sellers are getting a $1500 incentive to sign up, investors may consider giving $1500 for the “personal property.”

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