Finance Tips

HAFA Explained

To give a quick summary (you can Google HAFA for much more details), HAFA is a streamlined process for home owners to try to get a loan modification on their property, if the home owner is denied on the loan modification then the bank will encourage a short sale and incentives it for the home owner.

Who’s Eligible?

* Have to live in the home or have moved out in the last 90 days due to a job transfer

* Delinquent on the mortgage now or in foreseeable near future

* Loan balance of 0,000 or less

* Only applies to your first mortgage

* Borrowers mortgage payment must exceed 31% of monthly income

** Note there are few more requirements but this is the majority of them…

Incentives

* 00 given to home owner at the closing for a successful short sale

* Servicer on the loan gets ,500

* Junior lien holders get up to ,000 to release the liens for short sale

** Paid for by the U.S. Treasury**

Time Line For HAFA Process

* Bank has 30 days to approve or deny the loan modification, if denied short sale encouraged

* Borrower submits “short sale” package to lender

* Bank to review value of home and amount of money owed and establish what price to list home

* Borrower/Real estate agent has 14 days to submit listing paperwork to the bank

* Real estate agent has 120 days to get an accepted offer on the home

* Real estate agent has 3 days to get the offer to the bank

* Bank/Servicer has 10 days to approve or deny the offer

* Bank to give a minimum of 45 days to buyer to close

Banks Participating

Bank Of America

Chase

Wells Fargo

GMAC

Citibank

Many others

Get your FREE Las Vegas Short Sale Kit packed full of vital information pertaining to the Short Sale Process, Nevada Foreclosure, Pros and Cons, Hardship Package Information and more.

The Ballen Group – Las Vegas Short Sale Specialists
North Las Vegas Short Sales, Henderson Short Sales
3100 S. Durango #106 Las Vegas, NV 89117
(702) 482-7739

http://www.ShortSaleinNevada.com

California short sales help homeowners in trouble in this global recession. Although many people have been affected worldwide, it seems California residents have been greatly hurt, because of its real estate bubble burst. Over the years, Californian homes and properties have seen a huge increase, which peaked and then went on a steep decline.

This left many homeowners who purchased these properties in their peak prices with mortgages now higher than the actual market price. Now, with the economy hurting and record job losses, these homeowners are unable to make these high mortgage payments.

This in turn has left the these property owners between a rock and a hard place. Knowing full well how damaging, falling back on payments can be on your credit score, they are trying to save themselves by selling their homes. Unfortunately for them, in order for the home to sell, it must be priced according to market value, which are their prices are inflated for the current market.

That leaves them pondering foreclosure.

Fortunately, foreclosure is not the only solution. Many people can actually benefit from the California short sale. The difference is, upon the approval of your mortgage lender, the homeowner is enabled to sell his property at a lower price than the actual mortgage amount. Obviously, this leaves a loss behind that someone must absorb. In many cases, the mortgage lender will approve such a deal as long as the homeowner is willing to absorb some of the losses. But this is not always the case, as every situation is individual and unique.

In order for a short sale to be successful, your mortgage payment must be in arrears, and the amount owed on the home must surpass the current market price of the home.

Then, along with finding a real estate agent who is willing to do a short sale (accepting a lower commission), your mortgage lender must be approached.

A short sale package from the lender must be requested, completed and files along with necessary documents that should be attached. Those documents include but are not limited to the previous year’s income tax returns, recent bank statements, recent pay stubs, and the deed of the home.

You will find that your mortgage lender or banker will be willing to help in such difficult times. For them, absorbing a loss involved with a short sale is often lower than if the property were to be foreclosed. Contrary to what many people believe, lenders are not in business to take over properties, they are in business to make money. With that said, foreclosing on properties is a very expensive and time-consuming procedure which many would prefer to avoid.

In closing, if you find yourself in difficult financial times and qualify for short sale, you should not only consider it a go ahead with it. It means the difference between your credit score being somewhat damaged and completely destroyed. In these hard times, you should know that it will not be easy to rebuild if your credit has been destroyed.

Sometimes in the foreclosure process a person finds that there is no way for the lender to modify the mortgage. The mortgage company cannot reduce the monthly mortgage payment low enough. The person facing foreclosure still cannot even make the new lower payment.

The person then has two choices, either sell their home or let the foreclosure go through and turn their home over to the mortgage company. Turning their home over to the mortgage company is the less desirable choice. So they decide they will try to sell their home.

They contact a realtor and place it on the market. It is priced reasonably but a long time passes before an offer comes in. The offer they get is very low. In fact, the offer is less than the balance on their mortgage.

This is known as a Short Sale. The home may be sold for less than the mortgage company is owed on it.

What happens when an offer like this is made?

The person cannot accept the offer on their own.

Since the mortgage company will get less than what they are owed on the mortgage, they have to either approve or reject the offer.

Most mortgage companies have a loss mitigation department which handles all mortgages in foreclosure. The sales contract has to be sent to them. They will review it and determine whether or not they will accept it.

What will this loss mitigation department look at?

Most have fixed guidelines they follow. They want to make sure that through this Short Sale they will recover most of the money that they are owed on the home. Typically they will look at what they stand to lose if they acquire the home through foreclosure and have to sell it on their own. If they lose less money on a Short Sale than by selling it on their own, they will approve the Short Sale

In making their decision the loss mitigation department looks at how much equity is in the home.

They also look at what the current value of the home is. They also look to see if they are any second mortgages or liens on the property. If there are, the holders of the second mortgages or liens may have to approve of the Short Sale.

Frequently it takes a long time before the mortgage company makes its decision on a Short Sale. Buyers are not aware of this. Unfortunately most mortgage companies do not regularly keep the parties informed on a Short Sale.

Weeks and even months can go by without the mortgage company communicating to anyone. This is frustrating to buyers. Some decide that the home isn’t worth it. They back out of the contract when they can legally.

With the rising number of foreclosures mortgage companies are willing to approve more Short Sales now. However, there are still many instances where they are rejected. If the Short Sale is rejected, the home has to be listed for sale again. The person facing foreclosure is now further behind.

If the mortgage company approves the Short Sale, the sale goes forward. The proceeds from the sale are sent to the mortgage company. Normally the mortgage company forgives the balance that was due on the mortgage.

Because Short sales need the approval of the mortgage company and because the process can be complex, the person facing foreclosure should not handle this on their own. They should seek the assistance of a lawyer or an expert in Short Sales.

Waiting for approval on a Short Sale does not stop the foreclosure process. In some instances, the short sale is not approved and the closing does not occur in time in time to save the person from foreclosure. This just makes a horrible situation worse. This is another reason a person facing foreclosure should not handle a Short Sale on their own.

In the past any person who stopped the foreclosure through a Short Sale had to declare the amount of money that the mortgage company forgave as income on their tax return. They were liable for tax on it. In 2007 congress passed a law amending the tax code. President Bush signed this into law. This amendment stipulates that from January 1, 2007 through December 31, 2009 no person who paid a mortgage company less than they owed on a mortgage will have to pay tax on any part of the debt that the mortgage company cancelled.

With any Short Sale, the person’s credit is affected. Their credit scores drop. The Short Sale appears on their record for seven years. They typically will not be able to get a mortgage to purchase another home for several years.

Fannie Mae is one of the biggest holders of mortgages in the United States today. It is estimated that between Fannie Mae and Freddie Mac that just about 95% of homes are under their control. These two mortgage giants decided to call together their foreclosure defense lawyers and see what they could do to help homeowners keep their homes from going into foreclosure. The giants in the industry realize that evicting families from their home is not a good thing and in order to provide foreclosure defense for homeowners they would have to find a solution.

The foreclosure defense program for homeowners will become effective December 15 which will help the homeowner to remain in their home. Foreclosure lawyers are trying to act fast to help those facing foreclosure get help from the new streamlined modification program implemented by Fannie and Freddie. Finally homeowners will be able to save their home thanks to the help of the industry who holds their mortgage.

It is not sure yet how many homes will be affected but it is a certainty that those who are will appreciate the new program. The foreclosure lawyers’ plan is to suspend foreclosure sales on any occupied single family properties. The foreclosure lawyers also suggested that any evictions from these homes be stopped giving the families the time to appeal. This is the best hope for families who are facing eviction from their homes. The best step now for any homeowner facing foreclosure is to obtain a foreclosure lawyer and apply for foreclosure help.

The best effort to stop foreclosure is to put the homeowner on a fast track to saving their home. Borrowers will be given the opportunity to lower their monthly mortgage payment by reducing the mortgage interest rate, extending the life of the loan, and changing the amount of the monthly payment. The best defense that Fannie Mae feels that they are providing for the homeowner faced with foreclosure is to create a more affordable payment plan for borrowers who are at risk of foreclosure.

The Fannie Mae streamlined modification program along with President Obama’s Affordability and Stability Plan are the best programs to-date that will help the borrower keep their home. When you are facing foreclosure use the services of a foreclosure lawyer to help you save your home. Now is the time to act since Fannie Mae provides foreclosure defense for homeowners that will help save your home.

Professional foreclosure defense attorneys can put the power back in your hands so you have more control over your future finances and the fate of your home. There are many ways to avoid this, save money, and prevent your credit from being damaged. So before walking away from your home, consider the help of a professional.

Extensions and Forgiveness

Some homeowners facing foreclosure are simply stuck due to lack of time or defaults and fees that are adding up too quickly. They may still be able to salvage their home, but will require some flexibility on the lender’s behalf. A foreclosure defense attorney can request the lenders to give payment extensions as well as forgive some fees and defaults that may have accrued.

Lower your Monthly Payments and Interest Rates

Most people find themselves unable to make their minimum mortgage payments, or that the interest has inflated to an unreasonable amount. It is especially difficult due to excess financial strain caused by the weak economy and job market, as well as rising prices elsewhere. Many people have found themselves torn between the mortgage payment, putting food on the table, and the electricity bill. This kind of attorney can help you negotiate a lower monthly payment and interest rates with your lender. Rate reduction can immediately relieve financial stress and help you get back on your feet and saving money again. It will also keep you and your family in your home.

Forbearance

In certain circumstances, this kind of lawyer may be able to convince a lender to agree to a forbearance period. During this time, your monthly payments may be greatly reduced or temporarily stopped altogether. Once the forbearance is over, you will resume payments as usual, or may be able to make some further loan adjustments.

Short Sale

If paying a reduced monthly payment is still financially impossible, you can negotiate a short sale with your lender. This process is far less damaging to your credit. The bank will attempt to sell the property quickly at a small loss, which helps both parties avoid the high costs and consequences of this situation. Some lenders require a certain set of criteria to request a short sale; however, a skilled defense lawyer can often fight for those who don’t initially qualify for this option.

Deed in Lieu of Foreclosure

Another option for is to request a deed in lieu. In the scenario, the homeowner returns the property to the bank and is released from any further obligations. Now, the attorney is invaluable under these circumstances because many lenders will demand a deed of lieu with recourse, which means they can later sue the former homeowner if the sale amount is less than the original loan, therefore collecting any difference lost. It’s an easy trap to fall into, especially for a homeowner under duress, which is why a foreclosure defense attorney can help you ensure a deed in lieu without facing further financial consequences.