Monday, December 21, 2009
The Making Home Affordable Programs new mandate may be great news for home buyers of Orange County CA short sales!
The Making Home Affordable Program (HAMP) has taken aim at standardizing the long process of short sales and making the process fairer, quicker, and more clear to borrowers and buyers. We are currently reviewing the 41 pages of details related to this new (HAFA) program and are finding it very intriguing.
Unlike before, when offers needed to be present for most banks to even think about approving a short pay sale, the HAFA guidelines will enable borrowers to potentially agree to a set of terms that would be acceptable to the bank prior to listing the property. There is also legislation that will provide financial incentives to lenders and investors for agreeing to a short sale as well as protection to borrowers from the possibility of having to repay the short debt.
Maybe the biggest news is that loan services will be given only 10 days to respond to short sale offers! And again, the aim is to have all the sale terms agreed upon up front so that when a buyer comes with an offer, the response can come much quicker.
The servicer also will determine the minimum net proceeds for a short sale; if an offer presented to the servicer by the borrower or listing broker meets the net proceeds requirement, then the servicer must accept it. This is a huge deal. Not only will buyers have the potential to know what an acceptable price is ahead of time, they also will get a response to the offer in a reasonable amount of time.
According to HAFA, the loan services must make a policy detailing the criteria borrowers, borrowers homes, and offers from potential buyers must fit in order to be eligible. Prior to asking for a short sale, homeowners must also be given the opportunity and participate in an attempt at loan modification. While we are still wading through the details, here's what we know so far:
Benefits to Homeowners:
-Provides a criteria set to help them determine if they qualify, this will be a big help since in the past, homeowners were basically indirectly told that they don't qualify unless they are behind in payments.......leading many people to default, and many times still be denied, when they may have been able to stay current if they had known denial was imminent.
- Helps aid in proper short sale pricing
- Gives uneducated homeowners a chance a loan modification
Benefits to Buyers:
-Shortens short sale process
- Gives buyers a realistic idea of what price the bank will take
- Gives banks incentives to take the short sale payoff and sell the house to the buyer instead of foreclosure
-HAFA goes into effect April 5, 2010
- HAFA only applies to non Fanny Mae and Freddie Mac lenders (though there is speculation they may follow suit)
- Applies only to loans up to $729,750
- The banks are still in control over what the accepted payoff criteria is
If you'd like to see what type of short sale inventory is available in the area, our Orange County Foreclosure Homes for sale page has all the foreclosure homes currently on the market.