As of June 1, 2012 the Treasury Department announced the following changes to the HAFA Program (Home Affordability Foreclosure Alternative):
- The program has been extended to December 31, 2013. The short sale can be initiated up until this time as long as the closing date happens on or before September 30, 2014.
- Previously only owner occupied properties where eligible. Now they have extended the program to non-owner occupied properties which include rentals, second homes and vacant properties. However, the property cannot be owned or secured by a business entity.
- HAFA relocation assistance of $3,000 will be paid to the primary resident whether it be the borrower or tenant providing that the property be vacated upon closing of the transaction. Vacant properties do not qualify for HAFA relocation assistance.
- If HAFA relocation assistance is provided, the HUD must be reflected appropriately.
- If there is a tenant living on the property, it is the borrowers responsibility to ensure the property is vacated by close of escrow.
For more information on HAFA guidelines, go to: http://www.makinghomeaffordable.gov/programs/exit-gracefully/Pages/hafa.aspx. Or feel free to contact me, and I would be glad to answer any questions.
Better Homes & Gardens Real Estate
Believe it or not, this really is a good time to sell. The inventory is at record lows in the Sacramento area. There are more buyers than homes on the market, so homes are going very quickly. I am seeing 10 to 20 offers on homes within the first few days of the listing date. You might think this is only true for homes price at or below $300,000, but this is NOT the case. My partner and I had a listing in Roseville recently. The home was listed at $555,000. At the end of day two we had 20 offers, so we had to tell the buyers agents that we were not accepting any more offers. When we asked for everyone’s best and final offer, we received counters back at a higher offer price even though they may have already been above list price in the original offer! This home was not even a traditional sale, it was a short sale. Another agent in our office had the same thing happen recently with his listing in Loomis which was priced in the low $700,000’s.
If you have been contemplating selling your home, this is a great time to go for it. I am not sure how long this window of opporotunity will exist.
Feel free to contact me with any questions. I would be happy to provide you with a complimentary Compartive Market Analysis on your home.
Better Homes & Gardens Real Estate
925 Highland Pointe Drive #140
Roseville, CA 95678
The question I hear a lot is “Can the 2nd lien holder come after me for the balance owed?”. The answer is “YES” in certain situations. Let me explain. In a foreclosure situation, the lender can most definitely come after you if your lien is consider “recourse” debt vs. “non-recourse” debt. The essential difference between a recourse and non-recourse loan has to do with which assets a lender can go after if a borrower fails to repay a loan. As a matter of principle, borrowers almost always favor non-recourse loans, while lenders almost always favor recourse loans. In both types of loans, the lender is allowed to seize any assets that were used as collateral to secure the loan. In most cases, the collateral is the asset that was purchased by the loan. For example, in both recourse and non-recourse mortgages, the lender would be able to seize and sell the house to pay off the loan if the borrower defaults.
The difference comes if money is still owed after the collateral is seized and sold. In a “recourse” loan, the lender can go after the borrower’s other assets or sue to have his or her wages garnished. In a non-recourse mortgage, however, the lender is out of luck. If the asset does not sell for at least what the borrower owes, the lender must absorb the difference and walk away. You may also her the term “money purchase loan”. This is the same as “non-recourse” debt. This means this is the money you used to purchase the home. If you refinanced or have a home equity line, these loans are considered “recourse” debt.
I am starting to hear from a number of colleagues that their clients are getting letters in the mail from collectors asking to begin payment of their “recourse” debt several years after a foreclosure. I think we will start seeing a lot more of this which is why it is extremely important to understand your options with a foreclosure vs. a short sale.
Senate Bill 458 (SB458) was passed in July of last year (2011) prohibiting lenders from a deficiency judgement against the first or second lien holders regardless of whether or not the debt is considered a “recourse” debt. This is a huge win for homeowners who can no longer pay their mortgage and have no other options.
For anyone considering letting their home go to foreclosure vs. a short sale, I strongly urge you to consult with an attorney and CPA. I would be glad to give recommendations if you live in the Sacramento area.
Lyon Real Estate
Serving the Greater Sacramento Area
Navigating through the short sale process can be very daunting and take anywhere from 3 to 6 months on average to close if not longer. That is why it is important as a Realtor to make sure your client REALLY likes the home and is okay with riding the storm so to speak. The short sales that tend to take longer are because the delta between listing price and what is owed is significant between the first and second lien holders. And if the first lien and second lien are with different banks, you can expect the process to take even longer. If the buyers agent knows all the facts, they can help set the appropriate expectations on how long it might take. There could be other liens on the property too like unpaid HOA dues which can add complications. In many cases the lender is not willing to pay past HOA dues, so you have to get creative in determining how some of these things will be paid.
Let’s face it, it can be very difficult to keep buyers motivated for months on end–especially when there are infrequent status updates due to lender volume. It is a very frustrating process, so I completely understand where buyers are coming from. Although not all short sales take a long time. I have seen some short sales close in two months or less.
Because this process can take a long time, I am seeing some Realtors allowing their buyers to put in multiple offers on homes to see which one they will get first. I really don’t agree with this tactic. Sellers are trying to do the right thing by short selling their home to avoid further credit issues and allow their debt to be forgiven. Buyers submitting multiple offers could be pushing the seller into a foreclosure situation which is not good.
Published by: Sheri Negri