Replies to This Discussion

Permalink Reply by Bryant Tutas on April 2, 2011 at 12:30pm

Paul. This is an excellent question. I don't have a definitive answer BUT it's my understanding that HAFA only applies to 1st liens. based on that I can't see where the 2nd would be obligated to participate even though they are HAFA participants. maybe one of our members will have a better answer for you.

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Permalink Reply by Rick Stuart on April 3, 2011 at 3:10am

Participation by the 2nd is voluntary so eo even if the 1st agrees, you still need to the 2nd to before you can close the short sale.  Often difficult to get the 2nd to agree because the HAFA guidelines stipulate the 2nd can only get $6000 or 6% whichever is less and must agree not to pursue for any deficiency.  Moreover, no 3rd party may make any monetary contribution to 2nd to increase the amount the 2nd receives for lien release beyond the HAFA agreed amount from the 1at.

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Permalink Reply by Linda Susan Fox on April 3, 2011 at 3:43am

No, the second does not have to agree to participate.  The first will contribute up to $6000 or 15% or the outstanding balance with $6000 being the maximum.  I just closed one where Chase on the HAFA contributed $6000 and the buyer contributed another $6000 to release the junion lien (Dyck Oneil)..  All on the HUD and approved by the Chase.

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Permalink Reply by John Treadwell on April 3, 2011 at 4:47am

I had this and even though the 1st approved HAFA the 2nd didn't we had to re-summit as a normal short sale to get it approve by both

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Permalink Reply by Michael Schneider on April 3, 2011 at 6:26am

The 2nd must approve participation in HAFA, and I think it's done on a case-by-case basis.  So, the statement "the 2nd participates in HAFA' does not mean they will approve your deal.

And, most importantly, in my experience, the mortgage insurance company must also approve.  I have three HAFA deals where the MI company denied, as they are fully entitled to.  (Including portfolio MI, not just borrower MI.)

Voluntary participation by the 2nd and the MI is part of the design of MHA HAFA, so appealing this is probably going nowhere, in my opinion.

But,  The cap of 6% of the 2nd's principal balance was removed.  It is just $6,000 total, I believe.  Which could be significant in some cases.

Eg, 1st = $200,000, 2nd = $40,000.

Under Treasury MHA/HAFA (non-GSE), the first is "allowed" to contribute $6,000 to 2nd for release AND full-satisfaction. (I don't think this applies to GSE HAFA, as least not yet?)

Both parties must waive all future rights to the deficiency.

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Permalink Reply by ShirleyCoomer on April 4, 2011 at 3:41am

I recently close a short shale with GMAC the 1st and Citi the 2nd. After dealing with the Citi negotiator who was rude, demanded 10% of balance owing and difficult I escalated to a manager who told me Citi does participate in HAFA and they had to accept what the 1st was offering. I had their approval letter within 24 hrs.  At the first the negotiator wanted to give us 30 days to close...back to the manager and he said no, they had to give a 45 day approval.  Letter received, short sale closed.

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Permalink Reply by Michael Schneider on April 4, 2011 at 4:04am

Shirley,

Can I ask...

What was the dollar-amount going to Citi from net proceeds?  And the Citi principal balance?

 

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Permalink Reply by ShirleyCoomer on April 4, 2011 at 4:39am

Citi received $3268.00 which is what  GMAC offered per the balance owed per HAFA guidelines. They were owed $54,461.

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Permalink Reply by Aaron Ayotte, Short Sale Monkey on April 4, 2011 at 9:58am

Absolutely -- I've used them and they WERE AWESOME!!  Conference called right into BofA with me and the Seller on the line -- got the postponement of the foreclosure sale right on the spot!!  AND it was a Saturday!!!!

 

877-300-5454 -- tell them you want "MHA HELP".

 

If the 2nd CHOOSES to be a part of the HAFA program, then they have to follow the rules....period.

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