MN Short Sales are turning towards the HAFA Program- Short Sale Expert with Edina Realty, Rachel Scarrella out lines the HAFA program below

Home Affordable Foreclosure Alternatives Program (HAFA)In 2009, the Treasury Department introduced the HAFA program to provide a viable option for homeowners who are unable to keep their homes through the existing Home Affordable Modification Program (HAMP). The HAFA program took effect on April 5, 2010 and sunsets on December 31, 2012.
Home Affordable Foreclosures Alternatives Program: Guidelines and Forms
HAFA provides incentives in connection with a short sale or a deed-in-lieu of foreclosure (DIL) used to avoid foreclosure on a loan eligible for modification under the HAMP program. Servicers participating in HAMP are also required to comply with HAFA. A list of servicers participating in HAMP (including HAFA) is available at: http://www.makinghomeaffordable.gov/get-assistance/contact-mortgage/Pages/default.aspx
HAFA Provisions
Complements HAMP by providing a viable alternative for borrowers (the current homeowners) who are HAMP eligible but nevertheless unable to keep their home. Uses borrower financial and hardship information already collected in connection with consideration of a loan modification. Allows borrowers to 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 (no cash contribution, promissory note, or deficiency judgment is allowed). Uses standard processes, documents, and timeframes/deadlines. Provides the following financial incentives: $3,000 for borrower relocation assistance; $1,500 for servicers to cover administrative and processing costs; Up to $2,000 for investors who allow a total of up to $6,000 in short sale proceeds to be distributed to subordinate lien holders, on a one-for-three matching basis. Requires all servicers participating in HAMP to implement HAFA in accordance with their own written policy, consistent with investor guidelines. The policy may include factors such as the severity of the potential loss, local markets, timing of pending foreclosure actions, and borrower motivation and cooperation. REALTORS® continue to raise issues with NAR about shorts sales and the HAFA process. NAR has created an online mailbox for REALTORS® to share their experiences and provide specific examples of the problems they are facing with lenders. These emails will be collected and used by NAR in its ongoing discussions with lenders and the Treasury Department.

Bill introduced to speed up short sales

This could be huge for short sales in minnesota and elsewhere! Read the article for more information. Or call Rachel Scarrella at 651-246-3210 Bill introduced to speed up short sales

Short Sale Expert Rachel Scarrella With Edina Realty Talks About Minnesota Short Sale Options

What is a Short Sale and What is Involved in Selling One?

What is a short Sale? A short sale is when a hardship occurs and the home sells for less than the amount owed plus the selling expenses. There are various causes of hardship including but not limited to: payment increase or mortgage adjustment, loss of a job, death of a spouse, divorce or separation, too much debt, reduction of income, and or failure to sell for what the home is worth. In order to avoid foreclosure many homeowners are turning to their real estate agents to short sale their home. There are many steps involved in this lengthy process, as laid out below.

The first step in a short sale is finding a qualified agent that has experience in this area of real estate. Not someone who has done one or two in the past few years, but one who is up to date on the trends, laws and expectations of the banks. If you have a real estate agent who you have worked with and they aren't familiar with the process, see if they have someone if their office who does, and have them co-list the home. If an agent doesn't know what they are doing, then the chances of them successfully closing your short sale drop dramatically.

Once you have an agent picked, you both will go through the necessary documents needed for submission to your mortgagor(s). If you have one mortgage, the process is easier than if you have two or three, but regardless the same information will be sent to all lien holders. You will need to provide the following documents to your real estate agent: a signed authorization for them to represent you and negotiate on your behalf, a written hardship letter, your last two bank statements from all checking and savings accounts, last two paystubs, most recent 401k statement, name of mortgage company and account numbers for all mortgages on the property. At this time you will also sign a listing agreement with your agent for them to list your home. Since you are selling as a short sale, and the buyer will have to wait longer than a traditional sale, the price is lowered to reflect this inconvenience. But keep in mind as a short sale seller, you typically don't pay anything towards the sale of your home, unless negotiated with the bank at the end of the process.

After collecting the necessary documents and paperwork, your real estate agent will list your home for sale and start submitting your documents to your mortgage holders. Most mortgage companies do not like to get documents until an offer comes in, but some take them up front. Keep in mind you need to have your home in show condition and work hard to get an offer or offers on your home to submit. De clutter, stage the home, fresh paint, etc.

Once an offer comes in, your agent will meet with you to go over the details and sign the offer for submission to the bank. Behind the scenes your agent will be working with the title company to get together an HUD-1 to submit with the offer. This document allows the bank to see a fairly exact number of what they will be netting on the sale. Your agent will submit the entire offer along with the HUD-1 to all mortgage and lien holders for approval. The wait now begins!

After an offer is submitted to the bank your agent will work to negotiate it through. There is a lot of behind the scenes work that goes into this stage of a short sale. The banks may have to pay off a second and third mortgage, tax liens, etc. All which play a role in the amount of time it takes to get their decision. This can range from a few weeks to 6-9 months! Once a decision is made the bank comes back and does one of three things: accepts the offer as is, counter offers the buyer, or rejects it all together. They may also do some negotiating with the homeowner in terms of promissory notes, bringing cash to closing etc.

After all parties agree to the terms the offer now has final acceptance and can move forward to closing! Congratulations you have just sold your home!

Although this is generally what happens in the short sale process, it is not a guarantee. Every single short sale is different and has its own set of issues. Some move through quickly to acceptance, while others are never accepted at all. Thus it is so very important to work with a knowledgeable and experienced agent, who will walk you through the process step by step the entire way.

Overall a short sale may not be the way one wanted to go, but if there is hardship and the homeowner needs to sell, then this may be the best route to take. Hopefully the above information will be helpful in making that decision.

Rachel Scarrella Edina Realty 651-246-3210 http://www.RachelScarrella.com http://shortsalemn.blogspot.com/

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Buying a Short Sale in Today's Real Estate Market

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Today's housing market offers a unique opportunity for buyers. Never before have mortgage rates been so low, and coupled with lower home prices buyers a making out with bargain deals! One such bargain is found when someone buys a short sale. A short sale occurs when a homeowner owes more on their home than they owe to the mortgage company. Thus they are selling their home for a loss giving the bank a short equity sale; "short Sale". This is also called being "upside down on your mortgage." To sell the home both the homeowner and their mortgage company must agree to the terms of the sale which typically increases the negotiating time considerably.
From the time a buyer decides to make an offer on a short sale, to the time they close and get their keys, can vary tremendously, although average time is 3- 6 months. In that time frame an offer is received by the listing agent, various documents are collected from the homeowner and submitted with the offer to the bank, and then the bank starts their process of negotiating the offer with both the homeowner, and other lien holders, and the buyer. The process tends to take so long because the banks have no set requirements for these sales, and because they are experiencing an overwhelming amount of them at this time. The process can also be delayed if there are multiple mortgages on the home. In that case, all mortgage or lien holders need to come to agreement on the terms of the sale before a c losing can occur.
If you are considering buying a short sale the number one question you should consider is "how long can I wait." Some buyers make offers and are moving into their new home within two months. Others wait a year, only to find out the bank will not accept a short sale at all, the home subsequently goes into foreclosure, and the buyer is left starting their home search over. A few items to consider: if you are renting when is your lease up? Do you have some place to live while you wait for the short sale to go through? How long will you wait on this sale before with drawling your offer and moving on? Is your current home sold? Or do you have a home to sell before buying another home (this is important because banks do not accept contingent offers for short sales)? All are important items to consider and discuss with your real estate agent before looking at short sale listings.
Although the process may seem scary, stress, or long, many buyers are finding that it was all worth it when they close on their new home, in which they paid well below market value for! Buying a short sale is not for everybody, but for those that decide on it, it can be a rewarding move in the end.
Rachel Scarrella
Edina Realty
651-246-3210
RachelScarrella@EdinaRealty.com
http://www.rachelscarrella.com/
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