Impact of Changing to HAFA on Buyer

Hi -- Apologies for my first post being a request for help, but I'm getting nowhere with my agent or attorney, and hope some of you might have some advice.  In short, I'm trying to understand how a decision that's just been made -- about 60 days after we put our offer in -- to move the seller to the HAFA program might impact our offer and the time frame for closing on the short sale.

 

THE DETAILS:

 

We made an offer on a short sale about 60 days ago.  We are using a "disclosed dual agent," who is working for both us and the seller.  The agent is not handling any of the details of the short sale negotiation; it's all being done by the seller's attorney.  Our offer is about about $110K, or 29%, short of the original loan amount.  There's no second lien, but there is PMI.

 

Mid-week last week, I learned that a lis pendens has been filed on the property.  In response to my questions about this filing and the impact on our pending contract, in which I asked for some pretty basic info like "who is the investor," I got what I can best describe as a pat on the head and an admonishment to not worry about it from the seller's lawyer.  I was also told that "all of the paperwork is with Aurora" (the servicer) and that the seller's attorney was to call back for an update last Friday (8/5).

 

I got a call from our agent this morning, advising me that the servicer is now trying to get the seller approved for the HAFA program.  She can't tell me what that means for us or whether it will add or or shorten the time frame for getting an approval.  Since it's my understanding from reading this board that some investors (Freddie) require that the HAFA deal be agreed to before the property is marketed, I'm not sure where this leaves us.

 

What's bothering me is that no one -- not the agent, not our lawyer, not the seller's lawyer -- seems to be able to explain how all of this affects us.  This leaves me doing hours of research and probably coming to some wrong conclusions about it because I'm missing information and don't fully understand the process.

 

If there's anything any of you can offer as far as switching -- seemingly mid-stream -- from a "standard" short sale to a HAFA short sale, I'd appreciate it.

 

Thanks.

 

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Replies to This Discussion

Permalink Reply by Richard on August 10, 2011 at 6:33am

SSbuyer,

 

No apologies needed.  I can tell you from my own personal experience here, this is by far, the best resource I've seen since starting into short sale hunting. That's what this site is for.  The people are great, responsible and very knowledgeble.  Someone, somewhere will hear your prayer.

 

Stay tuned,

Rich

Permalink Reply by Sandra Allen on August 10, 2011 at 9:12am

As Richard stated, no apologies needed.  For the most part, borrower outreach is conducted to see if the borrower is HAFA eligible. I've had and I currently have a short sale listing turned HAFA, then back to traditional short sale.  Originally, the borrower had no interest in HAFA.  Why? I don't know. Too much paperwork?  Not sure because the SSA/ RASS is minimal.  She then had to go through the HAFA qualification anyway.  Did it add more time? Yes, but it may cause more time because if the borrower does not qualify for HAFA afterall, the borrower had to be released from HAFA and a new file had to be submitted into Equator, back to the traditional short sale department.  That is how it has worked for my files and Equator.   It will depend on the smoothness in transition afforded to the listing agent/borrower by the loan servicer and the quick responses and doc submission by the listing agent/borrower as well. 

 

You mentioned Freddie.  Is this a Freddie loan?  You can search by googling MERS and homeowners to get the link to find out the servicer and investor for any loan by address.  It sounds like you are worrying too much.  Please stop doing hours of research.  Every scenario is different and it obviously causing confusion.  The loan being a Freddie/Fannie, private etc... has more issues for the borrower/list agent to be concerned with than the buyer.  I truly understand that you feel left in the dark because you just want answers.  We all do when it comes to the processing of short sales.  Sometimes they aren't there and the best thing to do is keep in constant communication with your broker (dual agent right?).  I trust that he or she is not intentionally holding out information and should be updating you accordingly.   

Permalink Reply by SSbuyer on August 11, 2011 at 2:58am

Sandra & Richard --


Thanks to both of your for your replies.


Sandra -- I'm not sure who the investor is. I can tell from MERS that it's in the hands of an investor, because it shows US Bank as Trustee, but there aren't enough characters to say on whose behalf.  When I talked to the agent, she didn't even seem to understand the difference between the servicer and the investor, but just kept telling me that I shouldn't worry about what's going on.  At the end of the day, telling me I have nothing to worry about without explaining why I shouldn't be worried just makes me more worried, if you know what I mean.

 

We've made up our minds just to stop caring about whether we get the house or not, since there's nothing we can do.  We love the house, but at the end of the day if we don't get it, it will give us more time to sell our current home which gives us another $100 - 125K in buying power (we were able to qualify for a mortgage on the new house without having to sell our current home). 

 

Thanks again for the advice.

Permalink Reply by Richard on August 11, 2011 at 9:17am

SSbuyer,

 

I'm in the 6th month of a short sale.  Honestly speaking, my brother is my agent.  However, he knows enough about short sales to keep a distance and concentrate on easier targets.  As I've told him, with so many short sales on the market, how can you avoid them.  I'm pretty familiar with them and know when someone is not doing their job.  That's the reason I stay on him and the listing agent.  They both know, that I will ruin their day if the file sat too long.  I want to give everyone reasonble time to get their jobs done, but I don't want the file to just sat there.  Time is money.

Permalink Reply by SSbuyer on August 12, 2011 at 3:51am

Richard -- thanks for sharing your experience.  Glad to hear we're not the only ones who are suffering through this.  The whole process is so messed up for everyone involved.  2 years into this "crisis," you'd think they'd have figured out a way to make it less stressful for all affected parties!

Permalink Reply by Jeff Payne on August 12, 2011 at 4:23am

SS Buyer, it is sad that the banks still act like they don't know what they are doing or they act like they have not done it before.  Seems simple but the problem is that the banks are making too much money servicing these loans, if they were to just approve the short sale they may lose more money.

The other problem is that the average short sale negotiator HATES their job and their time employed is very short so there are always too many new people working on these files PLUS the guidelines constantly change.

Hang in there

Permalink Reply by Marcy Spieker on August 12, 2011 at 7:22am

No, you don't have to have the HAFA approved before marketing the property.  In fact, my HAFA deal already had a contract on it prior to getting our HAFA approval.  Once we got that, the process was greatly expedited. 

 

The seller must meet certain criteria prior to being able to qualify for a HAFA transaction.  He must have applied for a modification under the HAMP program and there must be a determination rendered.  It doesn't matter if the seller was turned down or approved for the mod, but it has to go full course.  The seller then has to requeat to be considered for a HAFA short sale in writing.  You can reasearch the requirements at www.cdpe.com if you would like. 

 

Whether the transaction goes HAFA or not, should really have no impact on the buyer, if anything, it should make it go faster.  The key is, you need someone to make it all happen.  Has the short sale package been submitted?  Has the request for HAFA transaction been submitted,?  Has there been sufficient follow up? 

 

Marcy Spieker

Permalink Reply by SSbuyer on August 12, 2011 at 10:10am

Marcy & Jeff--

 

Thanks.  I work in an environment where regulations change overnight, so what we did yesterday is exactly what we can't do today, so I can appreciate the frustration and burn-out they must feel.

 

Marcy, the seller's attorney is handling the short sale approval, and I don't have any direct contact with him.  As I interpret what the real estate agent told me, the initial "traditional" short sale package was complete about 2 weeks ago (say 45 days after we went to contract).  Now they have decided to try to get the seller into HAFA; I don't know whether they've done the HAMP work or not.

 

Our contract set an initial 60 day period to get the lender to agree to the short sale.  We now can decide every 30 days whether we want to continue with the process.  We'll just ask our lawyer to ask the seller's lawyer for a timeframe to get the approval on HAFA, including whatever time might be needed for the HAMP review -- and ask that he provide a realistic estimate, not a "best case scenario."  We'll see where this gets us.  I just wish that the agent was a bit more knowledgable and that the seller's lawyer would actually answer the questions we ask, not just tell us that it isn't anything for us to be concerned about.  Anything that impacts whether we get the house is something that concerns us.

 

Oh well, as they say, if wishes were horses, pigs would fly.

 

Again, I appreciate your responses.  They are all very helpful.

Permalink Reply by Bryant Tutas on August 14, 2011 at 1:15am
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