Archive for March, 2010
HAFA Series Part 2…Who is eligible for HAFA?
Posted by: | CommentsThis is part 2 in a 5 part series on HAFA.
HAFA is the Home Affordable Foreclosure Alternatives program from the U.S. Treasury effective April 5, 2010. HAFA is designed to complement the HAMP program and is expected to streamline and standardize the short sale process for qualified homeowners.
The borrower (homeowner) must meet the basic eligibility criteria for HAMP in order to be considered for HAFA:
- Must be the owner-occupant and be your principal residence.
- First lien (mortgage) originated before January 1, 2009.
- Mortgage delinquent or default is reasonably foreseeable.
- Unpaid principal balance no more than $729,750 (higher limits for 2 to 4 unit dwellings).
- Have a mortgage payment that is not affordable due to a financial hardship that can be documented.
- Have a monthly mortgage payment (including taxes, insurance, and home owners association dues) greater than 31% of your monthly gross (pre-tax) income
HAFA alternatives are available to all HAMP-eligible borrowers who:
1) do not qualify for a Trial Period Plan;
2) do not successfully complete a Trial Period Plan;
3) miss at least two consecutive payment during a HAMP modification; or,
4) request a short sale or deed-in-lieu.
HAFA Series Part 1 – What is the Home Affordable Foreclosure Alternatives Program?
HAFA Series Part 3 – Which loan servicers are participating and review of the timeframes
Are you a Las Vegas Homeowner facing a possible foreclosure or considering a short sale? Contact us today to discuss your options and/or to see if you qualify for HAFA.
Call Kathryn at 702-348-7191 or Stephanie 497-7705.
HAFA Series Part 1 – What is the Home Affordable Foreclosure Alternatives Program?
Posted by: | CommentsThe Home Affordable Foreclosure Alternatives (HAFA) Program provides additional options to avoid foreclosure and offers incentives to borrowers, servicers and investors who utilize a short sale or deed-in-lieu (DIL) to avoid a foreclosure.
In a short sale, the loan servicer allows the borrower to list and sell the mortgaged property with a licensed real estate agent with the understanding that the net proceeds from the sale may be less than the total amount due on the first mortgage. In other words, a homeowner’s lender allows the property to be sold at a loss where the lender initially takes all or part of the loss. Generally, if the borrower makes a good faith effort to sell the property but is not successful, a servicer may consider a DIL. With a DIL, the borrower voluntarily transfers ownership of the property to the servicer – provided title is free and clear of mortgages, liens and encumbrances.
Under normal circumstances a short sale can take several months and ongoing work to complete. HAFA is designed to simplify and streamline the short sale process by providing a standard process flow, minimum performance timeframes for lenders, sellers and agents and standard documentation.
If the program works as proposed, here are some highlights and benefits of HAFA for the qualified homeowner:
- Complements HAMP (Home Affordable Modification Program – www.makinghomeaffordable.com) by providing a viable alternative for borrowers (the current homeowners) who are eligible for a potential home loan modification through HAMP but nevertheless unable to keep their home.
- Uses borrower financial and hardship information already collected in connection with consideration of a loan modification under HAMP.
- Allows borrowers to potentially receive pre-approved short sales terms before listing the property (including the minimum acceptable net proceeds).
- Requires borrowers to be fully released from future liability for the first mortgage debt and if the subordinate lien holder receives an incentive under HAFA, that debt as well (no cash contribution, promissory note, or deficiency judgment is allowed).
- Provide financial incentives: $1,500 for borrower relocation assistance; $1,000 for servicers to cover administrative and processing costs; and up to $1,000 match for investors for allowing a total of up to $3,000 in short sale proceeds to be distributed to subordinate lien holders (on a one-for-three matching basis; up to 3% of the unpaid principal balance of each subordinate loan).
HAFA Series Part 2…Who is eligible for HAFA?
HAFA Series Part 3 – Which loan servicers are participating and review of the timeframes
Are you a Las Vegas Homeowner facing a possible foreclosure or considering a short sale?
The Serra Group is here for your confidential, no obligation consultation
regarding your options – there are solutions! Call Kathryn at 702-348-7191.
Short Sale Advice for New Guidelines (HAFA)
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Short Sales and the new government guidelines taking effect April 5th through the Home Affordable Foreclosure Alternatives (HAFA) are a current buzz in the media. I was recently contacted by the Wall Street Journal who wanted information on the pulse of the Las Vegas Market and market conditions for distressed properties. The article entitled New Program to Speed ‘Short’ Sales was published Sunday, March 14, 2010.
Here’s an excerpt and my words of advice:
Short sales are a valuable tool for struggling homeowners. But they’ve been notoriously difficult to complete, with buyers and sellers often playing a long waiting game before hearing back from lenders.
Now, however, a new government program plus some lender initiatives may make for shorter wait times and a smoother process. “Any structure is better than what we’ve had,” says Kathryn Bovard, a broker/manager for Prudential Americana Group in the Las Vegas area.
Lenders “have finally gotten on board with the fact that short sales will be a large part of the market over the next 24 to 36 months,” says Ms. Bovard.
While the popularity of short sales differs by market, in the Las Vegas brokerage that Ms. Bovard runs, 70% of pending sales are now short sales, she says.
For homeowners considering a short sale, Ms. Bovard says it’s important they speak to their trusted advisers, including their attorney and tax accountant, as well as a real-estate agent who has a short-sale designation.
For buyers, a lot of patience is required to finish one of these deals, says Ms. Bovard. “It’s a long, involved process. But the payoff is getting a tremendous value.”
Are you a Las Vegas Homeowner facing a possible foreclosure or considering a short sale?
The Serra Group is here for your confidential, no obligation consultation
regarding your options – there are solutions! Call Kathryn at 702-348-7191.
Looking to buy property in the Las Vegas Area? Start your free property search now.
The Las Vegas Real Estate Market Condition Report for February 2010, courtesy of Nevada Title Company with chart breakdowns of short sale and REO (Bank-owned) closings is presented here for your review.
Overall, the supply and demand schedules are little changed from previous month. Supply is relatively tight, especially for REO (61% of demand/16% of supply). Prices continue to show weakness for all types, more so for Short Sale and Standards. High price point properties, while showing increasing levels of activity, are still relatively slow exhibiting depressed Percent Selling/and Market Speed outcomes relative to lower priced offerings (about half the Percent Selling and half the Market Speed).
Note from the market history table that February 2009 demand is about equal to February 2010 while supply is greatly reduced. The reduction in supply relative to demand has shifted the price schedule to the current level where it appears to be “hovering.” Large changes in the price schedule are no longer occurring in favor of relatively small tentative up and down movements from month to month. This is characteristic of proximity to market bottom in terms of price.
Once again, short sale closings are continuing to climb. From January 10 to February 10, 2010, short sales were 23% of total single family residential properties.
Are you a Las Vegas Homeowner facing a possible foreclosure or considering a short sale?
The Serra Group is here for your confidential, no obligation consultation
regarding your options – there are solutions! Call Kathryn at 702-348-7191.
70% of Nevada Mortgaged Properties Have Negative Equity Position
Posted by: | CommentsNevada leads the nation with the highest percentage of negative equity properties according to the First American Core Logic 4th Quarter 2009 Negative Equity Data Report released 2-23-10. More than 70% of mortgaged properties in Nevada are in a negative or near-negative equity position.
Negative Equity (“underwater or upside down”) refers to the fact that the borrower owes more on their mortgage than the current value of the property. Negative equity occurs due to a decline in value, an increase in mortgage debt or a combination of both.
The following chart shows the five hardest hit states (Nevada, Arizona, Florida, California, and Michigan). The average “underwater” mortgage in Nevada is over 50% negative equity.
Here’s an excerpt from the report:
Negative equity continues to be concentrated in five states: Nevada, which had the highest percentage negative equity with 70 percent of all of its mortgaged properties underwater, followed by Arizona (51 percent), Florida (48 percent), Michigan (39 percent) and California (35 percent). Among the top five states, the average negative
equity share was 42 percent, compared to 15 percent for the remaining 45 states. In numerical terms, California (2.4 million) and Florida (2.2 million) had the largest number of negative equity mortgages accounting for 4.6 million, or 41 percent, of all negative equity loans.The rise in negative equity is closely tied to increases in pre-foreclosure activity and is a major factor in changing homeowners’ default behavior. Once negative equity exceeds 25 percent, or the mortgage balance is $70,000 higher than the current property values, owners begin to default with the same propensity as investors.
Of the over 47 million homeowners with a mortgage, the average loan to value ratio (LTV) is 70 percent. More than 23 million, or 49 percent of all homeowners with a mortgage, have at least 25 percent equity in their home and over 12 million have at least 50 percent equity in their home.
Here is a real-world example illustrates the severity in Las Vegas, Clark County. Borrower / homeowner owes a total of $325,000 on a first and second lien and property is currently valued at $160,000.
If you are a Las Vegas area homeowner facing a potential short sale of foreclosure,
contact Kathryn Bovard today for a no obligation consultation to discuss your options.
702-348-7191
