Deed In Lieu
If you read the HAFA guidelines, it indicates that when a seller applies and is accepted into HAFA, the documents they are required to sign include language that requires them to do a deed in lieu if they 1) fail to comply with the SSA or 2) after 120 days the home does is not sold and the lender does not offer an extension.
It seems that this is a big disadvantage as compared to a regular short sale and may tip the scales towards just going the regular route as opposed to obligating our client to relinquish their home, potentially in 4 months...especially as the lender "sets the price" and we know how badly they do on a great many valuations.
Does anyone think this may be a smoke-screen to enable the HAFA participants to quickly and more cheaply that foreclosure, get posession of a home? And, is the HAFA process so advantageous to the client that it makes the risk of mandatory deed-in lieu worth it?
I'd like to hear opinions and analysis. Thanks
Replies to This Discussion
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Permalink Reply by Steele V. Propp on
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HAFA was not designed by the lending industry so no, I don't think it is a smokescreen. I think lenders would tend to grant an extension anyway.
I am an REO listing agent and not seeing any rush by the lending industry to get houses into inventory. Quite the opposite.
Not that short sales are suddenly become the main thing either. I think the lending industry really doesn't know what is going to work so they are being over cautious and slow on everything.
My opinion, of course. -
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Permalink Reply by Steven Jackson on
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Aren't you a little concerned, though, about the mandatory Deed-in-lieu language in the SSA?
Steele V. Propp said:HAFA was not designed by the lending industry so no, I don't think it is a smokescreen. I think lenders would tend to grant an extension anyway.
I am an REO listing agent and not seeing any rush by the lending industry to get houses into inventory. Quite the opposite.
Not that short sales are suddenly become the main thing either. I think the lending industry really doesn't know what is going to work so they are being over cautious and slow on everything.
My opinion, of course. -
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Not so much a concern as we have nothing to base a worry on. Yet.
Aware, watchful, might be better terms for me.
I don't think the banks want these properties back, so until I see different I will wait and see.
Besides, try changing a federal guideline sometime :>)
Steven Jackson said:Aren't you a little concerned, though, about the mandatory Deed-in-lieu language in the SSA? -
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Permalink Reply by Bryant Tutas on
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You also have to remember that in order to do a DIL the seller would still have to sign the deed. All they have to do is refuse. Then the lender is right back to square one. The reality is that with FannieMae now treating DIL very much like a short sale as far as having purchasing ability in 2 years (instead of 4) there are many advantages to a seller doing a DIL instead of going through the short sale process. BUT...in most cases it is far better for the lender to do the short sale. The lenders have no desire to own real estate.
My opinion is that as long as properties are being handled properly getting an extension on the SSA will be a non-issue. But of course time will tell. -
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The 'time will tell' is what I am apprehensive about. Having a client sign up and then be told afetr 120 days "no, the investor chose not to extend"..Is the DIL still required if we market the property, get an offer, then submit the offer with an alternate RASS...then are we no longer bound to all the restrictive terms that go along with the upfront qualifying RASS process.
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Steven. What is their alternative? Make payments? Be foreclosed on? The seller just needs to be made aware of their options and then let them decide what they want to do. These are not our decisions to make. The best we can do is counsel our client/customers to do their own research, seek legal advice and then let us know if they want us to sell their property and assist them with the short sale.
We have to be careful that we are doing what we are licensed to do....sell real estate..and not crossing over into practicing law (interpreting a contract (SSA) and advising on it).
Steven Jackson said:The 'time will tell' is what I am apprehensive about. Having a client sign up and then be told afetr 120 days "no, the investor chose not to extend"..Is the DIL still required if we market the property, get an offer, then submit the offer with an alternate RASS...then are we no longer bound to all the restrictive terms that go along with the upfront qualifying RASS process. -
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Yup...good advice.
Bryant Tutas said:Steven. What is their alternative? Make payments? Be foreclosed on? The seller just needs to be made aware of their options and then let them decide what they want to do. These are not our decisions to make. The best we can do is counsel our client/customers to do their own research, seek legal advice and then let us know if they want us to sell their property and assist them with the short sale.
We have to be careful that we are doing what we are licensed to do....sell real estate..and not crossing over into practicing law (interpreting a contract (SSA) and advising on it).
Steven Jackson said:The 'time will tell' is what I am apprehensive about. Having a client sign up and then be told afetr 120 days "no, the investor chose not to extend"..Is the DIL still required if we market the property, get an offer, then submit the offer with an alternate RASS...then are we no longer bound to all the restrictive terms that go along with the upfront qualifying RASS process. -
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Exactly. If we keep pushing the short sale and convince the client to continue to pursue this when a DIL might be a good alternative, how would it look if no sale occurs and a foreclosure comes about? I can imagine how judge would look at our role... Hmmm, agent gets paid for short sale and doesn't for DIL. Can you say "self interest"?
Better to lay out the alternatives or better yet, have an attorney do so. Then let the client decide.
And I still think the bank will grant an extension. -
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I think they will too Steele.
I have had several very elderly sellers that chose to be foreclosed on instead of going through the stress of dealing with the lender. They had lost spouses and just couldn't afford their properties any more. At their ages credit was not a big concern. So they just packed up and left. Smart decision. Short sales are not for everybody.
Steele V. Propp said:Exactly. If we keep pushing the short sale and convince the client to continue to pursue this when a DIL might be a good alternative, how would it look if no sale occurs and a foreclosure comes about? I can imagine how judge would look at our role... Hmmm, agent gets paid for short sale and doesn't for DIL. Can you say "self interest"?
Better to lay out the alternatives or better yet, have an attorney do so. Then let the client decide.
And I still think the bank will grant an extension. -
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Permalink Reply by Tracy Gibson on
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Even though, the "lender sets the price" I suspect we could dispute the BPO.
If the BPO is accurate we have no worries, we get it sold in 120 days, no problem.
If the BPO is too high and all we get are low or no offers, then I would think disputing the BPO would be an option. -
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Permalink Reply by Aida Gonzalez on
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Question: In a FHA loan, do they accept a Deed in Lieu?
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