I’ve been fielding calls about the HAFA program for the last month and it’s so unfortunate that the “powers that be” decided to market this program so heavily but did not decide to use their “power” to inform the public. Here’s a quick run down of the qualifications:

• You must be 60 days behind
• Your home must be owner occupied (you can move out due to job transfer but not to “move up”)
• You must have gotten your loan before January 1, 2009

But the biggest kicker here is that the banks are doing this VOLUNTARILY! Meaning they don’t have to do this, so if you have the following types of loans, you are out of luck:

• FHA
• Fannie Mae (which actually administers HAFA!)
• Freddie Mac
• VA
• Ginny Mae
• Some Private Label loans

That’s about 70% of the loans out there.  When you get a loan at Bank of America for example, they sell the loan to an investor and keep the rights to collect the payment from you.  The investor is usually one of these companies above.  That’s where the problem is.

We don’t even get to talk about the “move out money” if you have a fannie mae loan.

How do you find out what type of loan you have?

You could simply call your servicer/bank and ask or you can call the institutions themselves and ask.

Here’s your scenario:

PMI (Private Mortgage Insurance, also known as Mortgage Insurance) company has a policy on the shorted loan that says they will pay the investor 20% of the loan amount.  So if you have a 400K loan, that’s $80K total payout.  In order to pay this, the insurance policy has certain things in place to make sure, just like any insurance policy, it’s designed NOT to be paid out.  Some of those actually related to short sales.

In a short sale, the investor would like to get the insurance to cover their loss on this. In most cases,  20% of the total loan PLUS whatever the investor gets through REO Sale = MORE THAN YOUR SHORT SALE.

That’s a big fail.

This is why you see Bank of America short sales getting so many complaints.  The investor is saying, “I want to help you, but based on my due diligence and my insurance policy, you need to bring another 20K to the table.” Dead deal.

As the leader in Short Sales in Georgia, we’ve  developed a list of banks that we do not like.  Of course, Bank of America would be on this list but what others?

Aurora Short Sale

Aurora short sales have this impossible to understand practice of resetting the ENTIRE process once a new buyer is presented.  For example, they agree to receive $100,000 in as a payoff, but because it took too long, the buyer walked.  We present a $120,000 payoff to them and it takes another 6 months to get approved.

Problems with Aurora Short Sale:

• 6 Months typically from start to finish
• Restart at near the beginning if buyer names changes

Unique Notes regarding Aurora Short Sales:

• System seems to be similar to Suntrust, in that you can talk to a rep about the short sale file.
• System seems to be similar to Bank of America in that you restart at an early phase.

Suntrust Short Sale

Suntrust is the one mega bank that is just so hard to figure out.  They take forever, but they have some of the best approval letters on the planet.  Unfortunately, during a Suntrust Short Sale, you will likely only get ONE chance to talk to a negotiator.  They send you to the reps that can check out the system, meanwhile the negotiator may call you at 7:30 AM on Saturday to request something in 48 hours.

Problems with Suntrust Short Sales:

• 6 to 9 months to close the Short Sale
• No communication from negotiator

Unique Notes with Suntrust Short Sales:

• Approval letters don’t typically have the buyer’s name, making the inevitable buyer substitution easy.

1. WINNER FOR WORST SHORT SALE BANK – Ocwen Short Sale

Has anyone actually talked to someone at the short sale department at Ocwen?  This is a joke.  It takes roughly 1 hour just to go through their system, their paperwork suggests that it’s likely better to go through foreclosure and the staff is both overworked and underpaid.

The biggest thing is that Ocwen is so bad at handling the short sale, the home owner is now encouraged to allow the foreclosure process to take it’s course.  The thinking is that Ocwen’s foreclosure department is most likely as inept as the short sale department.

Problems with Ocwen Short Sales

• 1 Hour or more to talk to a representative
• Representatives are unknowledgeable
• Paperwork and negotiation tactics are harsh, encouraging the home owner to allow foreclosure.