HAFA Highlights
Home Affordable Foreclosure Alternatives program changes rules.
Borrowers, lenders incentivized to avoid foreclosure.
Predefined steps intended to speed and facilitate short sale process.

Homeowners struggling to sell their homes in a short sale are getting some relief, thanks to the federal government’s Home Affordable Foreclosure Alternatives, or HAFA, program.

Up to now, many short sales — in which the lender accepts a sale of the property for less than the full amount owed — have taken months to complete. Sometimes, the complex and lengthy process has failed, resulting in foreclosure.

HAFA establishes streamlined short sale rules and incentivizes borrowers and lenders to work together to avoid foreclosure. The rules — in effect between April 5, 2010, and Dec. 31, 2012 — also are intended to speed up the short sale process.
“The streamlined short sales process will definitely help homeowners,” says Alex Tse, “J. Rockcliff and Frazzano Team experienced short sale agent”

Prior to HAFA, homeowners often listed their home for sale without an idea of what the lender would accept.

“A lot of sellers and their Realtors have not been able to sort out the problems with short sales and have given up on the process because, even after sending in the correct paperwork, they have sometimes waited three or four months for their lender to respond,” Liniger says.

Under HAFA, borrowers receive preapproved short sale terms from the lender prior to putting the home on the market.

Manel Sousou, an experienced J. Rockcliff and Frazzano Team member, says the updated short sale rules establish an easy-to-understand process with predefined steps that “make it easier for everyone to understand.”

Eligibility requirements
The HAFA guidelines apply to lenders who voluntarily participate in the HAMP program. The Department of Housing and Urban Development says more than 100 servicers have signed up to participate in HAMP, covering more than 89 percent of mortgage debt outstanding in the country.
To be eligible for HAFA, homeowners must first apply for a loan modification through the Home Affordable Modification Program, or HAMP. Owners who do not qualify for a loan modification or miss payments during the initial loan modification period qualify for HAFA.

Other HAFA requirements include:
•Property is principal residence.
•Mortgage originated before Jan. 1, 2009.
•Mortgage is owned or guaranteed by Fannie Mae or Freddie Mac.
•Borrower is delinquent or default is foreseeable.
•Homeowner demonstrates hardship.
•Borrower’s total monthly housing payment exceeds 31 percent of gross income.
•Unpaid principal does not exceed $729,750.

By RUTH SIMON

The $25 billion foreclosure settlement unveiled Thursday is expected to help many borrowers who are struggling to make their loan payments, owe more than their homes are worth or have lost their homes to foreclosure.

But the rules of the deal are complicated and banks have three years to meet their obligations.

The questions and answers below should help borrowers figure out if they qualify for help and what to expect from the process.

Who does the settlement cover?
The settlement covers borrowers who have loans that are serviced by one of the five big banks: Ally Financial Inc./GMAC Mortgage, Bank of America Corp., Citigroup Inc., J.P. Morgan Chase & Co. and Wells Fargo & Co. These banks handle payments on 55% of U.S. mortgages, according to Inside Mortgage Finance.

WSJ’s Nick Timiraos has details of a $26 billion settlement struck between the U.S. government and large banks over foreclosure abuses. AP Photo/Ross D. Franklin, file

My mortgage is with one of these banks. How do I know if I qualify for help?
It’s going to take some time to figure that out because the settlement has so many wrinkles.

What if my loan isn’t with one of the banks?
For now, the settlement covers only the five big banks. Government officials hope to strike a similar deal with nine additional banks.

How long is it going to take for me to get help?
Government officials advise borrowers to be patient. Over the next 30 to 60 days, settlement negotiators will pick an administrator to handle the logistics of the deal. Over the next six to nine months, the administrator, attorneys general and mortgage servicers will work to identify which borrowers get help. Servicers expect to begin reaching out to borrowers in the coming weeks, but they have three years to provide the required help.

How will I find out if I qualify?
Borrowers will get letters from their mortgage company. Each of the five servicers also has a website and a toll-free number for borrowers to get more information. Government officials are encouraging borrowers to contact their mortgage company to see if they qualify for aid.

Here are the links for each servicer as well as the official clearinghouse:

Ally/GMAC
https://www.gmacmortgage.com/finform/hhstart.htm
800-766-4622

Bank of America
http://homeloanhelp.bankofamerica.com/en/index.html?cm_sp=CRE-Mortgage-Refi-_-Home%20Loan%20Assistance%20Q3-_-MR16000S_marketing%20strip_%20ooo-123_hp_lahUmbrella-o
877-488-7814

Citigroup
https://www.citimortgage.com/Mortgage/displayHomeOwnerAssistance.do?page=overview
866-272-4749

J.P. Morgan Chase
https://www.chase.com/chf/mortgage/keeping-your-home
866-372-6901

Wells Fargo
https://www.wellsfargo.com/homeassist/
800-288-3212

National Mortgage Settlement

What are the rules for the principal reduction program?
To qualify for a principal reduction, borrowers have to clear several hurdles. For one thing, borrowers have to be behind on their payments or at “imminent risk” of default. The owner of your loan also makes a difference. Most of the principal reductions are expected to go to borrowers whose loans are owned by the banks, though some borrowers whose loans were packaged into securities may also qualify. The settlement calls for principal reductions on both first and second mortgages.

The deal doesn’t cover loans owned or backed by Fannie Mae or Freddie Mac, the government-controlled mortgage companies.

You can go to these websites to find out if you have a Fannie Mae or Freddie Mac loan:

http://www.fanniemae.com/loanlookup

http://www.freddiemac.com/mymortgage

What about the refinance program?
The refinance program applies only to loans owned by the banks. Also, borrowers have to be current on their loan payments and owe more than their home is worth. The interest rate on loans can be reduced to as low as 5.25%.

I’ve already lost my home to foreclosure. Can I get any help?
Borrowers who were foreclosed on between 2008 and 2011 are eligible for cash payments. The amount of the payment will depend on how many people file claims, but is expected to be around $1,500 to $2,000.

How do I file a claim?
The settlement administrator will mail notices to eligible borrowers once the process is up and running. Borrowers will have to fill out a simple form, but won’t have to prove they were foreclosed on and shouldn’t have been. Borrowers who are concerned they will be hard to locate can also contact their state attorney general.

That doesn’t sound like a lot of money. Shouldn’t I get more money if I was foreclosed on and shouldn’t have been?
Government officials say they wanted to create a streamlined process that would quickly get aid to borrowers. Borrowers who think they have been wronged can still file a claim with bank regulators or pursue other options.

THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 580e of the Code of Civil Procedure is amended
to read:
   580e.  (a) (1) No deficiency shall be owed or collected, and no
deficiency judgment shall be requested or rendered for any deficiency
upon a note secured solely by a deed of trust or mortgage for a
dwelling of not more than four units, in any case in which the
trustor or mortgagor sells the dwelling for a sale price less than
the remaining amount of the indebtedness outstanding at the time of
sale, in accordance with the written consent of the holder of the
deed of trust or mortgage, provided that both of the following have
occurred:
   (A) Title has been voluntarily transferred to a buyer by grant
deed or by other document of conveyance that has been recorded in the
county where all or part of the real property is located.
   (B) The proceeds of the sale have been tendered to the mortgagee,
beneficiary, or the agent of the mortgagee or beneficiary, in
accordance with the parties’ agreement.
   (2) In circumstances not described in paragraph (1), when a note
is not secured solely by a deed of trust or mortgage for a dwelling
of not more than four units, no judgment shall be rendered for any
deficiency upon a note secured by a deed of trust or mortgage for a
dwelling of not more than four units, if the trustor or mortgagor
sells the dwelling for a sale price less than the remaining amount of
the indebtedness outstanding at the time of sale, in accordance with
the written consent of the holder of the deed of trust or mortgage.
Following the sale, in accordance with the holder’s written consent,
the voluntary transfer of title to a buyer by grant deed or by other
document of conveyance recorded in the county where all or part of
the real property is located, and the tender to the mortgagee,
beneficiary, or the agent of the mortgagee or beneficiary of the sale
proceeds, as agreed, the rights, remedies, and obligations of any
holder, beneficiary, mortgagee, trustor, mortgagor, obligor, obligee,
or guarantor of the note, deed of trust, or mortgage, and with
respect to any other property that secures the note, shall be treated
and determined as if the dwelling had been sold through foreclosure
under a power of sale contained in the deed of trust or mortgage for
a price equal to the sale proceeds received by the holder, in the
manner contemplated by Section 580d.
   (b) A holder of a note shall not require the trustor, mortgagor,
or maker of the note to pay any additional compensation, aside from
the proceeds of the sale, in exchange for the written consent to the
sale.
   (c) If the trustor or mortgagor commits either fraud with respect
to the sale of, or waste with respect to, the real property that
secures the deed of trust or mortgage, this section shall not limit
the ability of the holder of the deed of trust or mortgage to seek
damages and use existing rights and remedies against the trustor or
mortgagor or any third party for fraud or waste.
   (d) (1) This section shall not apply if the trustor or mortgagor
is a corporation, limited liability company, limited partnership, or
political subdivision of the state.
   (2) This section shall not apply to any deed of trust, mortgage,
or other lien given to secure the payment of bonds or other evidence
of indebtedness authorized, or permitted to be issued, by the
Commissioner of Corporations, or that is made by a public utility
subject to the Public Utilities Act (Part 1 (commencing with Section
201) of Division 1 of the Public Utilities Code).
   (e) Any purported waiver of subdivision (a) or (b) shall be void
and against public policy.
  SEC. 2.  This act is an urgency statute necessary for the immediate
preservation of the public peace, health, or safety within the
meaning of Article IV of the Constitution and shall go into immediate
effect. The facts constituting the necessity are:
   In order to mitigate the impact of the ongoing foreclosure crisis
and to encourage the approval of short sales as an alternative to
foreclosure, it is necessary that this act take effect immediately.

The Federal Housing Administration (FHA) announced Friday that it is extending the suspension of its ‘anti-flipping rule’ through the remainder of 2011.

FHA Commissioner David Stevens says the temporary waiver will accelerate the resale of foreclosed homes in neighborhoods that are overrun with abandoned properties and blight. The move is intended to help stabilize home values and improve conditions in communities experiencing high foreclosure activity.

FHA regulations typically prohibit insuring a mortgage on a home owned by the seller for less than 90 days, but in February of last year, FHA temporarily waived this regulation through January 31, 2011, noting that in today’s foreclosure-ravaged marketplace, the agency’s research has shown that acquiring, rehabilitating, and reselling distressed properties often takes less than 90 days.

With the sunset date for that first extension just days away, FHA posted a notice on Friday extending the waiver through December 31, 2011. This action will permit buyers to continue to use FHA-insured financing to purchase HUD-owned properties, bank-owned properties, or properties resold through private sales.

By: Carrie Bay

RealtyTrac has released its 2010 foreclosure tallies for the nation’s largest metropolitan areas. The tracking firm found that foreclosure activity increased from 2009 in 149 of the 206 metros with a population of 200,000 or more, or 72 percent.

Interestingly enough, the metro areas with the 10 highest foreclosure rates all posted decreasing activity from 2009, but RealtyTrac says foreclosures became more widespread last year as high unemployment drove activity up in parts of the country that had been relatively insulated from the initial foreclosure tsunami.

“Foreclosure floodwaters receded somewhat in 2010 in the nation’s hardest-hit housing markets,” said James J. Saccacio, RealtyTrac’s CEO. “Even so, foreclosure levels remained five to 10 times higher than historic norms in most of those hard-hit markets, where deep fault lines of risk remain and could potentially trigger more waves of foreclosure activity in 2011 and beyond.”

Among the 20 largest metros, RealtyTrac says Houston (+26%), Seattle (+23%), and Atlanta (+21%) saw the biggest increases in foreclosure filings last year. However, cities in California, Florida, Nevada, and Arizona once again accounted for the nation’s 10 highest foreclosure rates, despite the fact that their activity retreated.

The Las Vegas metro claimed the No. 1 spot, with one in every nine homes there receiving a foreclosure filing last

As always if you have any questions please feel free to contact us anytime!

Glum market fundamentals, limited bright spots

Ilyce Glink is the publisher at Thinkglink.com.

Real estate isn’t much better than in the past two years. Unemployment is still high, and real estate sales are tied to jobs. Unemployment might have to go below 8 percent before the market is spurred.

Even with record low interest rates, lots of people don’t qualify to buy a house. And the number of households is shrinking. People don’t have enough money to live separately. Also, foreclosure is impacting housing enormously. Buyers don’t want to pay what sellers want. That drives down prices.

Some markets are very tough, like Florida, Michigan, Arizona and parts of Illinois. Prices may not have hit bottom. But it’s localized; even in Florida, some pockets are doing OK. Across the country, homes prices are up 1 percent. But after falling 35 percent, prices aren’t going to jump that much. This massive drop is unprecedented in the past 100 years.

I expect existing and new home sales to be weak this year.

Headwinds will temper recovery

Paul Bishop is an economist at the National Association of Realtors (NAR).

The real estate market will recover slightly this year. It won’t bounce back like you’d expect.

What’s pushing the housing market is low mortgage rates, high housing affordability and some economic growth. We’re adding jobs at a modest pace.

Headwinds include high unemployment, and our forecast doesn’t suggest that it will drop. And foreclosures are keeping the market from moving ahead more quickly. High levels of foreclosures exist in areas such as Florida, Nevada, parts of Michigan, and Ohio. Consumers will be more cautious. They don’t want to buy a home today because they fear falling prices. And there’s new concern about the process itself. It’s such a mess. We don’t know what the impact will be.

There are signs that the market is stabilizing.

Hardest hit areas are mostly at or near [price] bottoms. Best performing areas are in the middle of the country, from Texas up to North Dakota. They avoided subprime mortgages and never saw rapid increases in price. They haven’t suffered as much. And they’re not dependent on [cyclical] business like finance, retailing and construction.

Short-term, supply is high. About 4 million homes are on the market. That’s 10.7 months of inventory, which hasn’t changed much in the past few months. We hope to get to the 8- or 9-month range by the middle of this year, partly driven by population growth. It won’t be a straight line up, though.

Mortgage rates will rise. NAR expects them to average 4.8 percent this year.

More of the same in 2011

Barbara Corcoran is a nationally known real estate and business expert.

I see more of the same this year, for a few reasons. There will be more foreclosures. And getting a new mortgage is great if you have a stellar credit rating. It’s as if amazingly low interest rates were rendered meaningless.

There are rays of hope, though. As many markets are up as down in the third quarter, according to NAR. Florida, southern California and Nevada haven’t hit bottom yet. Until we get rid of foreclosures, we can’t have a rebound.

There are pockets of growth. Boston is in good shape, and Columbus, Ohio, is doing well. Parts of Florida are happier prospects, like the Treasure Coast. Markets with momentum should have an easier time this year. Metropolitan areas always lead the parade.

The government should lower mortgage rates for everyone. It’s like a Cash for Clunkers program, but for houses.

Mortgage rates: a sprung coil

Dan Green is a loan officer at Waterstone Mortgage and writes TheMortgageReports.com.

There’s more room for mortgage rates to rise than fall. I tell clients to lock in something now. When rates start to rise, they’ll rise quickly. There is lots of concern about ARM (adjustable-rate mortgage) resets. But I never believed that. The ARMs adjusting in 2011 are tied to LIBOR, and it’s cheap. Most mortgages are going to adjust down.

But mortgage guidelines will get tighter. It will be harder to be approved. There’s extra scrutiny by banks. They’ve raised their minimum requirements so the loans are better. That decreases the buyer pool.

This article was originally published on HSH.com.

1. Settling past-due debts with a creditor to pay less than you owe. Anyone who has amassed enough credit card debt has gotten the pitches in the mail, and sleepless fretting debtors see the ads on late-night TV: Pay Down Your Debt! It sounds too good to be true, and Chen confirms this. “Even though you’re getting rid of bad debt, it stays on your report as ’settled’ rather than ‘paid off,’ and is now updated on the payment date, making it look like it happened more recently than the original loan. Your credit score is weighted more heavily toward recent events than past events, so taking a bad debt from the past and moving it to the present will count against you.”

2. Transferring balances from a high-interest account to a low-interest account. Ahh, the old trick of debt-juggling from card to card. You get an offer for a new card with an enticing 0 percent annual percentage rate for a whole year. Who knows what might happen in that interest-free year—you could even pay off this debt for good, right? Balance transfers can seem like a good idea at the time, but Chen says, “While it’s better for your bottom line, opening new accounts works against your credit score. Plus moving all your debts to one card could negatively impact your credit utilization (your ratio of debt to available credit).”

3. Closing old credit cards. One school of thought holds that the more credit you have open, the more risk that it could be misused, or it could leave you more vulnerable to fraud, so you should close your unused cards. But closing cards hurts you two ways, says Chen, by increasing your debt utilization and shortening your credit history length. “Creditors like to see that you have a lot of unused, available credit, and that you have accounts that have been open for a long time without problems.”

4. Paying off your car or your mortgage. What? Paying off your mortgage can work against you? Chen steps in to explain the enigmatic concept of “credit mix.” “FICO reports that 10 percent of your credit score is determined by your ‘credit mix,’ and they like to see a variety of installment and revolving loans. If all you have is an auto loan and three credit cards, paying off the car will leave you with nothing but revolving credit.” However, Chen points out that in that case you might want to focus on paying off that debt.

5. Avoiding debt altogether won’t help you. So basically, no matter what, you’re doomed! (Kidding. See the conclusion below for a glimmer of hope.) “While eschewing debt is in vogue these days, your credit score is based on how well you can handle credit, and all of your score’s components are based on you having open debt accounts,” Chen says. That means that even if you are anti-credit cards, well-managed credit accounts will eventually help your case if you plan on getting a mortgage.

It may now seem like credit scores are a hopeless “damned if you do and damned if you don’t” situation. But there are ideals you can strive for to achieve a good credit rating. Chen points to Lending Club’s rate table, which has remarkably transparent disclosures, for some parameters to aim for.

Based on their data, you can draw the following conclusions:

• The ideal number of loans or credit lines open is 6-21. Therefore, it’s pretty difficult to get penalized for having too many accounts.
• The ideal number of credit inquiries is 0-3 in the last 6 months. Anyone who has had 6 or more will have a tough time getting a loan. This can be troublesome when shopping around for mortgage rates. “Soft pulls” of credit scores (such as when you check your own credit score, or when a potential employer does) are always better, when possible.
• A 5+ year credit history is ideal.
• 5% to 85% credit line utilization is ideal.

And don’t forget the basics: pay off at least the monthly minimum balance for many years running.