Paddy Deighan is a real estate investor, attorney and advocate. This blog is dedicated to providing useful information, tips and guidelines for all of your real estate needs.
Thursday, September 27, 2012
Good Old Discussion about HAFA
Let's Have a Good 'Ole Honest Discussion about HAFA. It seems customary these days to read a blog and perhaps members respond. However, sometimes it makes sense to turn it into a discussion in which the collective knowledge and experience of the members can benefit everyone. Sooo, I chose a frequently discussed, but little known four letter word…HAFA.
I read a thread on another website and I replied to the thread. The person that posted it was horrified when I provided some details about HAFA. She had no idea about some of the “details”. Folks, this is a Federal program. Did anyone think that it would be anything other than a convoluted nightmare??
Frequently, I have my clients opt out of HAFA. Sometimes the home owner does not qualify of course. Today, many home owners are asking for HAFA because they believe that they will receive a relocation expense.
Let’s start with some of the basics. One of the troublesome aspects of the HAFA program for me is that if a short sale is denied under the program, the home owner as AGREED TO A DEED IN LIEU!!! No terms, nothing specified. Just an agreement to a deed in lieu!!! Sometimes they have to vacate almost immediately!!! No relocation bonus…nothing!! We have to read the program details CAREFULLY.
Another aspect that I do not like is that the program unnecessarily puts restrictions on payments to a second. They offer below market rates for a junior lien payout (I view 10% as an industry standard). This can and does cause a lot of problems. For example, HAFA will frequently not only underpay on a junior lien, but it will require full satisfaction on the second. This is a bit incongruous!! On many occasions, the buyer had to pay for the full release of the lien on their side of the settlement sheet.
Today, my office is handling a short sale in South Carolina. The first authorized 10% to the second but they required full release of lien. Second (Green Tree) wanted 15% for full release. The buyer originally thought that he had to come up with $4,700 and he agreed. Ok, no problem. THEN, NationStar decides that it was a HAFA approval – THIS despite the fact the my client signed a HAFA opt out form. Now, the first is only willing to pay 6% to the second and the buyer had to dig into his pocket for an additional $3,000. I reminded NationStar (via Skype since I am in Switzerland at the moment) that there was a HAFA opt out and that at no time in the past did they ever suggest anything other than 10% to the second. It was take it or leave it!!! Where are the home owner rights?? Isn’t this America and we have a choice?? Hmmm, stupid question, yes this is America but we have fewer and fewer choices…can’t even get a 32 ounce Big Gulp in NYC….
Paddy Deighan J.D. Ph.D