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Musings about HAFA guidelines – each short sale is unique

Do time frames matter?

I received an email from an agent struggling with her HAFA short sale. Troubles with a short sale (a HAFA one, or any ol’ short sale) is not uncommon. Trying to manage all of the details of the transaction, keeping the buyers and sellers happy, and getting multiple banks to move towards short sale approval is not easy feat.

Here’s what she had to say:

I’m in the midst of a HAFA short sale. The second lien holder was offered 10% of the money owed them–and now they’re saying they need “45 days to evaluate the proposal.”? The second lien holder previously said they participate in HAFA.?? Has the Government done anything about holding banks to its HAFA timelines?

The question as to whether the Government has done anything about holding the banks to the HAFA timelines is a good one. Some banks process HAFA short sales more efficiently than others.

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But, the easy answer to this question is ‘no.’ There has been very little done in order to improve HAFA timeframes, although the Government did modify the HAFA guidelines (in the form of Supplemental Directive 10-18) effective on February 1 of this year in an attempt to jumpstart the HAFA program.

A few other things to consider:

Submit short sale packages to all lien holders at the same time. It is a best practice in short sale negotiating and processing to submit short sale packages to all lien holders at the same time. Since short sale processing time frames are often a mystery and can be lengthy, it is best to get the short sale package in line for review as early as possible. If you learn in the midst of the short sale processing of a change, than new settlement statements and/or contracts can be submitted during the short sale process.

Junior lien holders can be offered up to $6000. Supplemental Directive 10-18 states that junior lien holders can be paid up to $6000 in a HAFA short sale. If the ten percent that the agent refers to in her question is less than $6000, than the lien holder can request more money. And, if the second lien holder is not on the list of HAFA participants but wants to accept the deal (and waive the deficiency balance), this lien holder is not under any obligation to work within the Government’s HAFA time frames.

These short sales are tricky and not for the faint of heart. This agent may have lots more details about her HAFA short sale that were not at my disposal. But, as you can see, there are a lot of criteria to consider when processing a short sale. Each short sale situation is as unique—just as all fingerprints are different and no two snowflakes are the same.

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Written By

Melissa Zavala is the Broker/Owner of Broadpoint Properties and Head Honcho of Short Sale Expeditor®, and Chief Executive Officer of Transaction 911. Before landing in real estate, she had careers in education and publishing. Most recently, she has been able to use her teaching and organizational skills while traveling the world over—dispelling myths about the distressed property market, engaging and motivating real estate agents, and sharing her passion for real estate. When she isn’t speaking or writing, Melissa enjoys practicing yoga, walking the dog, and vacationing at beach resorts.


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