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Ramesh Kumar, Home Buyer in San Bernardino County,...

Timeline for HAFA approval with BOA-approved offer already in place?

Asked by Ramesh Kumar, San Bernardino County, CA Tue May 3, 2011

In early April 2011, I submitted an offer on a short sale in the greater LA area. I received bank approval of my offer 10 days ago (only a 3 week waiting period) and thought to myself, "Wow, that was easy, GREAT!" Little did I know....

BOA was fine with my offer, however, they requested that the seller provide $1,000 and proof of "HOA non-delinquence." Apparently, this offended the seller and they have now decided to apply for HAFA to get $3,000 in relocation costs to offset this $1,000 requested by BOA. So, in summary, 10 days ago I thought I was only mere days from going into escrow. Now, I fear I may be weeks and maybe months away as I wait for HAFA approval.

Any idea how long it takes for the seller to get HAFA-approval on a home with a bank-approved offer already in place? My timeline requires me to be in a home by early June, is this a possibility with this home?

Any advice would be greatly appreciated. Thank you.

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As others have stated, the HAFA program requirements differ significantly from standard short sale requirements. Moreover, a HAFA approval may or may not solve the seller's $1,000 contribution or non-HOA delinquency compliance issues.

Based upon my professional experience, this situation appears to be one where the seller really does not want to give up his/her home and is trying to 'play' every option possible to 'buy time' to stay in the property. Their next step after 'playing' HAFA, which they will likely reject because it requires them to agree to a deed in lieu of foreclosure, is to file for bankruptcy protection.

Your options appear to be:

1. Stay in the deal while recognizing it may takes months to close, if ever.

2. Seek out a 'standard sale' vacant property that can accommodate a 30-day closing.

3. Put your household goods in storage when you have to move in June, take an interim rental, and keep looking for your special place to call home.

I'm sorry that you are in this difficult situation. Unfortunately, it is not an uncommon occurrence.

Good Luck!


Meredith McKenzie
Associate Broker
Keller Williams Realty
Los Angeles, California
0 votes Thank Flag Link Tue May 3, 2011
Something tells me you aren't getting the whole story here...

The request for HOA status is required in any transaction, short sale or otherwise, therefore it should have been expected and addressed with the HOA by the time you received a short sale approval from the lender. When a negotiator submits an offer to the bank for consideration all existing debts are addressed on the HUD settlement statement. This, of course, would include any late fees, assessments transfer fees or past dues to the HOA. If they're current, it's no problem to get the letter. If they are not, the HOA can be difficult while they join the negotiation to get paid.

A request for the seller to contribute towards closing is not uncommon and typically results from a review of financial statements and bank statements. If a seller has money in their accounts at the end of each month, the bank will likely ask them to contribute at closing. However, a clever and experienced negotiator can find any additional funds needed from various sources in the deal. One of those sources, as someone suggested below, is for the buyer to contribute that money. In your case, if the deal makes sense, and you wish to close sooner rather than later, you may consider offering to pay the additional $1,000.

And now HAFA. When a file is placed under HAFA review, it is removed from the banks short sale system. Particularly in the case of Bank America. This means that any issued approval letters become null and void. Bank negotiators will no longer be able to respond or work on the file until the file completes a full HAFA review.

This process is supposed to take 30 days or less to produce a response from the third party vendor Bank America has hired. My personal experience on the past two HAFA files I've submitted (one now 45 days in and the other 60 days in) is that it takes longer to get a response. Note this is just to get a response to the HAFA short sale. If you are denied for HAFA, you may begin again with the lender to complete a regular short sale.

As a certified HAFA specialist with 200+ short sale files under my belt in the past two years, it pains me to say that I don't have much faith in the HAFA programs, nor do I believe the banks prefer to work through the program to provide approvals. It's not uncommon for someone losing their largest asset to work through the full gamut of emotions, including becoming offended by the banks actions. It's important for everyone involved to keep their eyes on the prize.

In this case the seller's prize is a completed short sale that avoids foreclosure. By taking steps that may hinder approval and lose a good buyer such as yourself, they risk far more than simply being offended.

Perhaps now is a good time for someone in your transaction to remind everyone else that cooler heads will prevail. For yourself, don't get lost in a deal that does not have a chance of closing. If you begin to see signs that the deal may not meet your needs address them immediately. If you don't find yourself on the same page as the seller, inform them that if you cannot meet your objectives you will need to move on. Often times that is enough to keep everyone on track.

Best of luck and keep us posted.

Allan S. Glass
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ASG Real Estate Inc. ®
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Los Angeles . CA 90049
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0 votes Thank Flag Link Tue May 3, 2011
It's very unlikely that you will move into this house by early June. They will probably be turned down for HAFA, and then it will have to be resubmitted as a standard short sale.

If you really need to be in by early June, you should start looking at standard sales and REOs. Short sales usually take a long time, and combined with escrow, you won't make it.

You might be able to pay the $1000 for the buyer, and bring the HOA current to satisfy BofA to continue on this short sale, but since the sellers think they are going to get $3000, don't count on it going forward.
0 votes Thank Flag Link Tue May 3, 2011
Are you paying cash because the HAFA has to be approved and you have to complete your escrow. At some Lenders the HAFA department is an entirely different division so there will be some backtracking to rereview the file.
0 votes Thank Flag Link Tue May 3, 2011
The guidelines for HAFA already changed twice this year and it is very difficult for even experienced agents to be on top of everything unless he/she is on the committee of TARP. It should not take that long (3 months or more) for bank to approve the HAFA once bank have all the necessary documents from the seller. As for June move-in, just cross your finger that everything will be in your favor and that bank will not come up with any more surprises.

Good luck !!

Daniel Choi
Broker Associate
CDPE Advanced
Nextage Capital Advisors
1521 Wilshire Blvd
Los Angeles, CA 90017
0 votes Thank Flag Link Tue May 3, 2011
Hi Ramesh;
HAFA short sales follow strict mandated timelines, so your fear that it will take "months" is unfounded. I had two short sale files "scrubbed" for HAFA qualification last month. B of A took 10 days, and GMAC took 8 days. Proof of HOA non-delinquence is as simple as a letter from the HOA president or management company, and should be no more than a 24 hour turnaround. The seller should not be offended by that, it's standard operating procedure in a short sale. If you really want the property, you could make an offer to Bof A to pay them the $1000 on the seller's behalf. But a strong negotiator (the listing agent) should be able to get that waived.
I have more concern about the dedication of the seller to the short sale process, and about the overall expertise of the listing agent. Checking on availability of HAFA for a seller should be the FIRST thing a listing agent does, before the property even goes on the market. In addition, will the seller cooperate in the short sale if the property and seller do not qualify for HAFA? Can the listing agent tell you whether the property and seller meet HAFA criteria?
If you are getting a lot of no's to the above questions, and your agent's assessment of the seller's motivation is low, it may be time to move on.
Deborah Bremner
The Bremner Group at Coldwell Banker
REALTOR, 00588885, ABR, CDPE, eAgent, CSP, SFR, HRC, CRE
(O) 310-571-1364 DIRECT
(D) 818.564.6591
(C) 310-422-4288
http://www.thebremnergroup.com
Accredited Buyer Representative|Certified Distressed Property Expert |Pre-Foreclosure Specialist Certified
I want you to know that I appreciate any referrals from friends and associates who may be in the market to buy or sell real estate. You can count on me giving them the same high-quality service I provide to all of my clients.
0 votes Thank Flag Link Tue May 3, 2011
HAFA gives them a total of 4 months to sell the home and live there while they are selling it. Now add about another 2 week to the four months as depending where they are in applying for HAFA....Seller can move out can sell and move before ther 4 months but some buyers opt to stay there the full four months as this benefits them just as it benefits you to get a property under market value. If you are getting a great deal than it is worth the waite but you might add the pros to you cons.. in my expereince you will no be in there by early June.. good luck
0 votes Thank Flag Link Tue May 3, 2011
Early June, probably not. HAFA is only being approved for a verrrrrrrrrry slim number of homeowners. HAFA is another failing government program. BofA doesn't want to give the seller $3k to move & they'll make it very difficult to get approved this way. They will first probably try to beef up your offer price to some unreasonable figure from their doing their own appraisal.

If you really like this house, I strongly suggest you invest in your OWN lender ordered appraisal & give it to the listing agent to forward to BofA & the HAFA assigned "government vendor". Then YOU know what it's worth & they won't be able to mess with you on value.

EmilyKnell1@yahoo.com
562-430-3053 cell
Realtor Since 1996
Short Sale Expert
0 votes Thank Flag Link Tue May 3, 2011
The bank's are reimbursed the $3000 from the Federal Government. It does not cost them anything.
Flag Mon Jul 9, 2012
You are right... it could take months... a new file needs to be created and there are more stringent guidelines in HAFA so you may be waiting for a while. Just hang in there... if they are only working your offer, you just need to be patient. If you want the property, time is a small thing to ask for to get what you want. Good luck.
Sincerely,
Richard "RJ" Kas (SFR, SRES)
"Representing the finest properties from Los Angeles worldwide"
KAS Properties - Coldwell Banker Previews International - Beverly Hills East
9388 Santa Monica Blvd, Beverly Hills, CA 90210
310.859-5334 office - 310.488.9826 mobile - 310-273-0670 fax ATT: RJ
RichardKas@gmail.com - http://www.RJforLA.com - DRE: 01352771
Sellers Buyers Investors Leasing Consulting
0 votes Thank Flag Link Tue May 3, 2011
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