The internet is great for getting information quickly. I love the fact that I can go to one of the search engines and type up a questions and get a list of responses which I can quickly look over. However, there is so much unfiltered information out there; sometimes you become more confused about the topic after reading a lot of conflicting information.
This obviously applies, and perhaps more so, in the world of Short Sales and Foreclosures. There seems to be so much incorrect and half correct and sometimes completely wrong floating around out there.
The one that I hear frequently and had to deal with today was the one about HAFA. There seems to be a consensus out there that HAFA slows down the short sale process.
I’ve heard of this before and interestingly I heard it from a negotiator with Chase who flat out told me that HAFA will tack on 90-120 days to the overall process (I didn’t bother grilling her on how she arrived at these statistics). I’ve often heard Realtors on the buy side of my transactions tell me that they are not interested if the sellers were going for a HAFA short sale because it would add months to the process. I try to explain that is not a universal truth, and that things are different on a case by case basis; but some listen most don’t. To combat these issues, revisions were made to HAFA as of February 2011, one of the key revisions specifically states that arequest for HAFA (with an executed contract) MUST BE responded to within 30 days. New information takes time to filter downward.
HAFA Request
I just received an approval from Chase today. And it was a huge surprise for the buyer’s agent. As you can see from the filing of the request to the issuance of the approval letter, it took 12 days (and not 120 days as claimed). The Request was made on June 2, 2011 and the approval letter was generated on June 14, 2011. Granted this particular one only involved one loan so there was no second to deal with, but it still took less than two weeks.
Chase Approval Letter
This particular agent repeatedly asked me who was the third party handling the HAFA, but I always assumed he was asking me who was servicing the loan. And as such, I never paid too much attention to his query about the HAFA third party.
When I emailed him a copy of the approval letter, he was obviously happy about the quick turn around time but again asked me about the third party handling HAFA. This time I asked him to what he was referring?
This Realtor was under the impression that HAFA was a government program, so there was a central clearing house where all HAFA files went and that a third party was somehow responsible for getting the approval from HAFA. In our case, it was his belief that the Chase negotiator would simply collect the documents and then forward everything to a “HAFA negotiator” who would then take months to get the approval from this entity called HAFA and then refer the approval or denial back to the Chase negotiator.
Now I understood why he thought simply doing a HAFA short sale would delay the approval process by several months. (Now I appreciated him taking my word and sticking out the waiting period). I had to explain to this seasoned Realtor that HAFA is not a thing or a place which de-toured the short sale process; rather, it was just another process or a set of guidelines by which the participating lenders all agreed to abide to actually shorten the process; not cause further delay. He seemed surprised to learn this.
So what was my take-away from this experience? There is a lot of mis-information regarding HAFA and other things associated with short sales and distressed properties out there. Even the negotiators inside the banks are under the false belief that HAFA automatically means there will be a delay in the process and are not up to date on changes to the program. This is quite ironic in that HAFA was designed to expedite the short sale process; but the rumor has it complicating and delaying the process instead.
HAFA could take more time once the reponse has been granted but need more information or denied and must pursue a traditional short sale, but from my experience, it has to do with number of issues such as: not using the correct forms to initiate the request, or not providing sufficient documentations requested, not responding to requests in a timely manner, or a myriad of other reasons. After all, this is a new program which is only one year old, so there is the learning process by which everyone subjected to endure some discomfort. But one thing is certain: simply by requesting a HAFA short sale DOES NOT AUTOMATICALLY cause months of delay.
Don’t buy into the urban legend and continue to feed it more misinformation or half-truths.
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Comments
I appreciate the comment Eric.
You I also agree with you Eric, sometime HAFA can take more time to process for a myriad of reasons. However, the point in my writing this was to say that HAFA does not AUTOMATICALLY mean that the short sale process will be delayed by many months. I seem to hear that as almost a truism. I simply wanted to point out is is not. Here was a case where it was not delayed in any way because it was processed through HAFA.
You are right, the Realtor was asking me whether there was a third party handling just the HAFA portion. I told him right from the start that this was a Chase note and they were handling the servicing on their own, so there was nobody else in the equation. It was only later I found out that he had a different understanding of what HAFA was.
Luckily for me I have not had the occasion to do a BofA HAFA short sale through AMS or LRC. The ones I have had have not taken on a significantly longer time-frame simply because of being processed as a HAFA and through its guidelines.
Yes, it can take longer but again, from my experiences it was from things like being asked to submit documents over or some other procedural hiccup. So did these hiccups happen simply because it was a HAFA rather than a traditional short sale? From my experience and therefore, in my opinion: No.
I know each short sale is a case by case basis filled with unique twists and turns so we can't generalize but again there are servicers who don't want to do HAFA and or are very slow in there process.
Vie had a HAFA deal done in urn a month with chase and it was great. No problems at all however boa is an entirely different story. I believe possibly what the Realtor was asking you was "third party" was in regards to outsourced servicing companies that handle HAFA ss for the lender.
If you have a boa HAFA request it will go to either AMS or LRC (now UTLS) depending on it you have a contract or not. These companies can extend the process. They even can take a very long time only to tell you at the end that they denied the HAFA request and now you have to go the traditional route. Some won't tell you if the 2nd participates or the MI company so you can get to the end and get a HAFA approval per underwriting only to find out the 2nd won't play and your stuck starting over.
So you make some great points however in my humble opinion its a longer process.