I think I have figured why most your clients are not having luck with bank run HAFA programs...the difference between the Bank run HAFA program VS. the Non-Profit organization and why banks like to deal with NPO becuase they can write the loss as a charitable dontation to the NPO and it's in black and white in the MHA handbook and from my own experience is as follows...
I took this out directly from the MHA handbook and added my interpretation in the mix of this section.
6.1.2 Property Valuation
The servicer must, independent of the borrower and any other parties to the transaction, assess the current value of the property in accordance with the investor’s guidelines. (INVESTORS GUIDELINE) DOES THAT MEAN PROFIT MARGIN??? Each servicer’s HAFA Policy must include the procedures it will follow to periodically re-evaluate property value (CHANGE THE VALUE OF THE HOME IN ACCORD WITH INVESTORS GUIDELINES) and to reconcile discrepancies between the servicer’s independent assessment of value and market value data provided by the borrower or the borrower’s real estate broker. (basically balance or match to their liking) To the extent the new value determination is less than the value determination used in the SSA, the servicer must notify the borrower and/or the borrower’s real estate broker either in writing or verbally of the new value determination, and confirm the new list price or acceptable sale proceeds based on the new value determination. Servicers must document the new value determination in their revising system and/or the mortgage file together with the updated list price or acceptable sale proceeds, and the communication(s) to the borrower about such changes. While the servicer is not required to amend the SSA to reflect the new list price or acceptable sale proceeds, the servicer must honor the new value determination. Servicers are reminded, however, that in accordance with Section 7.1, after signing an SSA, the servicer may not increase the minimum acceptable net proceeds required until the initial SSA termination date is reached.
6.1.3 Expected Recovery Analysis
Although not a HAFA requirement, it is expected that "servicers"(banks) will, in accordance with (thier) "investor" Guidelines, perform a financial analysis to determine if a short sale or DIL is in the best interest of The investor, guarantor and/or mortgage insurer. The results of any analysis must be retained in The servicing system and/or mortgage file. The Base NPV Model does not project investor cash Flows (MEANING THE TRUE VALUE IS NOT IN ACCORD WITH INVESTORS RETURN) from either a short sale or DIL and should be used only to evaluate a loan for HAMP.
So my whole interpretation of both section 6.1.2 and 6.1.3 is this. First they have their ("independent appraiser determine" the fmv of the property which from what I see is all subjective and IMO marked up!!!) then they do a ROI analysis and determine how much money will they get back on the property. I find this hilarious...I really do...
This is the exact reason why!!! "They mark up the homes" to receive a higher ROI. If they are unable to mark up to a point where it's not obviously noticed of the unfair appraisal then they will simply find something to deny the whole request for HAFA. Again just my interpretation...
Guys! Stop going to the bank for HAFA it's not in the best interest for the homeowner your client. If the whole transaction does not satisfy their investors then these banks will simply not do it. Plus your client loses their home anyway and I bet it probably has to do with the market analysis and trying to secure a prospective buyer of the property once the short sale is approved.
The Alternative...Non-Profit organization (which many of you are unfamiliar with).
CH.4 SECTION 7.3 under ARMS LENGTH TRANSACTION -very small paragraph changes everything!!!
The Economic Stabilization Project based out in San Diego has what I call the model made for all. Their program is called the "new loan same home buyback plan". Not only do they set the homeowner with "future protection" with a revocable living trust which is the primary estate planning document and the "transition phase" with a credit repair program while they are leasing. Even if I explain all of what they can do, it would probably sound too good or I would probably not do them any justice. You just call them directly. 619-516-8113.
Every time I meet a client I ask them
1.) If they could, would they keep their home?
2.) I look over all the factors that lead them to this point such as income, loss of income, over extension of credit etc...
typical scenario doing a hafa with npo
1. Immediate funding of your short sale from thier investors.
2. Allocate more of your time to assist with other potential clients who were denied a home modification and are contemplating a short sale.
3. Less hassle trying to match other prospective buyers from short sale, because the homeowner under the buyback plan is the buyer.
4. Dual agent – An established Client once you have harnessed their trust and faith from the completion at closing a HAFA short sale along with their $3,000 grant.
5. Allowing the agent full 3% usual commission on the listing/ buyer.
6. The transition time from lease to buy back will be determined on how the client’s credit has been affected and the capacity to stabilize finances from saving and repair credit.
7. Following the natural progression of the Making Homes Affordable Program.
Please by all means if my interpretation is off point please correct me if I'm wrong. I'm going to tell you though. I'm not going on here asking why HAFA packages are being denied.
I think if you know the rules to the game (MHA handbook) then playing it will be that much easier for you and the client and the referee (banks). Thanks guys for reading I enjoyed writing this.