REALTORS® CORNER
Te HAFA Program, Short Sales and What it Means for Home Builders
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By JEMILA WILLIAMS, GRI, RDCPro, broker
and founder of Gemstone Real Estate Inc.
Jemila is a speaker and author of the upcoming book "The ABCs of BPOs." She can be reached at Jemila@ TeamGemstone
Realty.com.
pril 5, 2010 marked the launch of the Home Affordable Foreclosure Alternatives Program (HAFA). This program will assist homeowners who cannot afford to stay
in their homes by helping them avoid foreclosure and relocate to a home they can afford. This article will shed some light on some of the important facts about the program and what it means for the homebuilding and Realtor® community.
Program Guidelines
The purpose of the HAFA program is to reduce the amount of foreclosures in the market place and to streamline the short sale or deed-in-lieu of foreclosure process. HAFA is a subset of the Home Affordable Modifications Program (HAMP), and a component of the Making Homes Affordable Plan introduced by President Obama. Both programs allow families to avoid the costly foreclosure process, and minimize the negative impact of foreclosures on borrowers, financial institutions, the homebuilding industry and the economy.
The HAFA option is available for homeowners who either do not qualify for a trial mortgage under the Making Home Affordable Program or who cannot successfully complete the modification trial period.
A few helpful guidelines:
• Borrowers are allowed $1,500 for relocation assistance.
• Pre-approved terms must be provided by the lender before listing the property, including their acceptable net on the proceeds of the sale. It also requires that lenders must accept or reject an offer (with a reason) within 10 days of receiving all the required documents.
• Standardized processes and uniform documents will be utilized, thereby eliminating the cumbersome process of keeping up with the different lenders forms.
• Listing periods must be 120 days initially, with a possible extension to a total of up to 12 months.
• Lenders must not require a reduction on Realtor’s commissions up to 6%.
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• Lenders will be required to release borrowers from future liability on the first mortgage. This also includes subordinate liens that receive incentives under HAFA.
Stats, Trends and What it Means For You
HAFA was developed with the homeowner’s benefit in mind. However, it will also have some positive impact on your business. Besides helping strapped borrowers, reducing the number of foreclosures on the market will help combat the scourge of falling home prices nationwide.
In 2009, 2 million foreclosures were sold by less than 1% of Realtors®. The impending rise in short sales will reduce the number of foreclosures in the market place, and forecasts predict that the negative impact to property values will not be severe.
What does this all mean to you?
• The new streamlined process will encourage more Realtors® to pursue short sales as another line of business. Listings are lead generators for Realtors®. This means more access to buyers, therefore more exposure to your products.
• Broker Priced Opinions will be utilized to determine market value. My experience with BPOs has revealed that lenders do not like to use foreclosure comps unless they have to. This should present a favorable listing price for the home.
• The impact to credit scores is not as significant as that of foreclosures, allowing home owners to bounce back sooner and place them back in the housing market.
The Wrap Up
The HAFA program, if successful, will create a shift in the current market place. It will streamline a very cumbersome short sale process. There will be less vacant homes on the market, and hopefully an upward swing to the housing economy is heading our way.
MAY 2010 | HOUSTON BUILDER | GREATER HOUSTON BUILDERS ASSOCIATION – BUILDING A BETTER FUTURE
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