Randomdude19…, Home Buyer in Panama City, FL

HAFA timeline, what's typical and when should I get concerned? Buyer's view.

Asked by Randomdude1974, Panama City, FL Mon Jun 6, 2011

I'm trying to buy a short sale property. It's been >5 weeks since the seller accepted the offer and sent it to the bank. My realtor said we should have heard something in 14 days, but no word from the bank. I thought there were guidelines in terms of timelines the banks were supposed to honor or at least shoot for. Meanwhile, I presume the seller is slipping closer & closer to foreclosure.

From a buyer's point of view, what are my options? All I have is my realtor's word that he know's what's going on and he's on top of it. I'm assuming that the HAFA was already approved which is what he intimated to me.

Any ideas what the hold up could be and what I could do differently?

Thanks!!

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Answers

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In short sales, there are no definitive time frames the bank is held to in which they must give you a response/approval. The only time lines you can go off is on the short sale addendum to the Purchase Agreement, there are two areas where you can state how long YOU are willing to wait to get an approval from the bank. The default time is 90 days, but if you aren't willing to wait 3 months your agent can shorten that time period on the offer. The default time for the contract to automatically terminate is 120 days for both parties if no extension is agreed upon, and your deposit would be refunded to you. Extensions can always be signed.

Shortsales can be great bargains, but you have to be patient. I've had some shortsales close in as little as 60 days, but have also seen them go on much, much longer. Review your offer paperwork and look for that shortsale addendum, the dates will be listed on there. You are bound to the contract at least through the date written on there, or you risk losing your deposit money.

In some cases, you will see on the listing in the MLS "Shortsale Approved Price". In this case, the bank has already determined what price they are willing to take, and they've approved the Seller's to shortsale the home. You can close on these deals much quicker, say in 2 weeks if cash, 30 days if financing. All the paperwork has already been sorted, approved, the investor has signed off, so once they receive an offer at that price they can quickly sign off. If you offer less than the approved price, you are back at square one as all the negotiations have to start over with the investor.

If you really like the home, hang in there, because often you can snatch up a deal for way below market value. Also, Florida is the state that comes in for number 2 for longest time period before the bank actually forecloses on the home, averaging about 2-3 years from when the Lis Pendens was filed. You or your agent can look at the public records to see when the lis pendens (if any) was filed to give you an idea of how long its been since they were served.
2 votes Thank Flag Link Mon Jun 6, 2011
Hi Randomdude1974,

Yes, experience shows that the timelines for a successful HAFA Short Sales have taken up to six months or more. Having said that, the #1 most valuable component of a short sale transaction is setting deadlines for the lender to respond and making sure all required buyer & seller documents & disclosures are completed and submitted on time.

My best advice for you is to keep the lines of communication open with your Realtor. Your agent should stay informed and should be receiving weekly updates from the listing agent about the status of the sale. Most lenders now are begining to streamline the process. Therefore, there is less guess work, making the process quicker and less burdensome for all parties. I strongly believe that after six weeks from having forwarded a ratified purchase agreement to the bank, there must be some sort of feedback from the bank whether positive or otherwise.

Second, have your agent contact the listing agent to request "confirmation from the bank" that your contract was received and is being reviewed by loss mitigation. This could be a very simple fax or email transmittal. Just something to let you know that the lender has lost the file.

Third, I'm glad that you are aware that a low offer could get rejected or denied all together. At the end of the day the lenders are trying to minimize their losses. They focus on there net value and what they stand to gain by accepting a Short Sale in lieu of foreclosure. Of course, let's hope that the bank accepts your initial offer or responds with a counter offer to give another chance to better your offer."

Finally, I'll leave you with several key questions to discuss with your Realtor:

...1. ) Do the Sellers have a viable hardship?
...2. ) Has a Notice Of Default been filed?
...3. ) Is there a Foreclosure Sale Date?
...4. ) How many loans are on the property?
...5. ) Did the seller's sign the purchase contract?
...6. ) Has the lender performed their BPO or Appraisal?
...7.) Are there any missing documents to sign?
...8.) When can you expect a Short Sale approval?
...9.) Is there confirmation that the ratified contract was received by the bank?
..10.) Are the any legal issues regarding Home Owner Associations fees, IRS Tax liens, Title, Bankruptcy, etc.?

By combining all of these components, HAFA makes short sales more appealing to all parties involved. It's extremely important that buyers hire a Realtor who is trained to handle these complex real estate transactions.

Best Wishes & Good Luck!
0 votes Thank Flag Link Thu Jun 23, 2011
HAFA is supposed to give you a response within 14 ( or is it ten) days after the offer is received.
HOWEVER - this is from the time the seller was already approved into the HAFA program.
Once applyingfor HAFA the bank has 30 days to either accept or reject the seller into HAFA - BUT THIS RULE DOES NOT APPLY TO FANNIE OR FREDDIE LOANS - which actualy make up most loans out there. Fannie and Freddie have no set timeline for approval. Ive seen HAFAs take 6-9 months EASY for them to just decide whether the seller can or cannot go HAFA. IF approved into HAFA, your 14 day timeline starts AFTER THAT APPROVAL. HAFA is a joke and dont count on it for anything to happen fast. They should eliminate this useless program right along with HAMP.
As the buyer you really dont have much control over the situation, except to attempt to get clear information from the agent. Good luck
Web Reference: http://www.homesbyminna.com
0 votes Thank Flag Link Fri Jun 10, 2011
While HAFA has specific timelines that the bank is required to adhere to, I have already experienced a bank ignoring the timelines. It is called arrogance of power. In the vast bureaucracy of the bank their attitude can be, “so sue us.” On the other hand, has the seller complied with the timelines in their submission of all HAFA required documents, if not, that might be the problem.

In any case, have your agent get the updated scoop from the seller's agent and inform you in detail rather than he is "on top of it".
0 votes Thank Flag Link Mon Jun 6, 2011
A HAFA does have a time line. The bank has 30 days to approve the HAFA for the seller unless it is a Fannie loan then they have 6 weeks. The time frame does not begin until the seller has all his information to the lender. Most of the time they will not accept an offer on any property until the seller has been approved for the HAFA. The reason for this is once the seller is approved the HAFA tells the seller what to list it for. They will give the seller 120 days to sell the property. In June they will changing the rules to 60 days for the approval of the HAFA. Also all banks are different. Maybe you could ask if the seller has been approved for HAFA though underwriting. This would let you know when you 30 days started.

The holder up may be the negotiator. Once the HAFA gets though underwriting, the negotiator of has things they need to do before they order the appraisal. Once the appraisal is done the negotiator will let the listing agent know what to list the property for and then they will accept offers.

Maybe your agent could print out the time line for the HAFA short sale. There is nothing you can do but wait. Your realtor is doing their best.

Hope you get your property.

Nancy Young, Realtor

Prudential Shimmering Sands Realty
7939 Panama City Beach Parkway
Panama City Beach, FL 32413
850-235-1433 Office
850-258-7141 Cell
850-235-9003 Fax

NancyYoungPCB@gmail.com E-Mail
nyoung@knology.net E-Mail
http://www.PanamaCityBeachRE.com Web site
http://www.PanamaCityBeachsearch.com Web site
0 votes Thank Flag Link Mon Jun 6, 2011
If the seller's lender required a new BPO (broker price opinion) and if that came in higher then the contract -
it could delay the process - for a month or more -

I am not saying that is what happened your case - but I have had that happen.
0 votes Thank Flag Link Mon Jun 6, 2011
It can take months to get an approval for a short sale. Paragraph 4 of the Florida Short Sale Addendum has 90 days as the default timeframe for an approval and if no approval has been delivered in 120 days, the contract will automatically terminate. Read your paperwork closely to see what if your Realtor wrote anything different in there. Also, there is no "normal" timeframe, because every lender is different. I try to discourage buyers from short sales for this very reason and if they insist on buying a short sale, I set their expections for a long wait. I'm very surprised to hear your Realtor told you 2 weeks.
Web Reference: http://www.youtube.com
0 votes Thank Flag Link Mon Jun 6, 2011
It all depends on the bank. Which one holds the mortgage? The banks in my area at least generally will put the foreclosure off if they have an offer on the table that they feel they can negotiate. The seller's agent should be keeping on top of that with the bank.

The hold up is probably that the bank has to gather all the financial information from the seller, evaluate the offer, get an appraisal, and then confer with the investor to determine what their next move is, whether to accept your offer, counter your offer or just say no. I have found they rarely say no, but rather try to negotiate if they think the offer is too low.

Be patient just a little while longer. and best of luck to you.
0 votes Thank Flag Link Mon Jun 6, 2011
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