As a Sacramento short sale agent, I tell sellers when they call about all of their short sale options. Especially when they are dealing with a Bank of America short sale, because I close a lot of those. One of my sellers told me that talking to Bank of America about a short sale was like ordering a pizza. Bank of America so casually asked if she wanted pepperoni (a HAFA) or veggie (a traditional), and by the way, would she care for a side of chicken wings (a cooperative) or a garden salad (a streamlined)?
This seller lives in El Dorado Hills, in an exclusive gated community of Serrano. I've had several short sales in that community. There is an abundance of inventory on the market in El Dorado Hills, a lot to choose from. They have to be priced very competitively to move. Only the best homes, the most desirable homes, end up closing.
Her problem is she hasn't paid her HOA dues to the tune of about $5,000. She also would like to do a HAFA short sale. I wish there was a way I could present a Bank of America HAFA short sale in a positive light, but I have to be honest about it. Most of my sellers would rather crawl through the desert on their hands and knees naked in the midday sun than attempt a Bank of America HAFA short sale.
HAFAs are painful, especially a Bank of America and AMS HAFA short sale. They take about 5 to 6 months to close, if a seller is lucky -- and when was the last time you heard the term "luck" applied to a short sale? Many of my HAFAs have closed only because I kicked them, squeezed them and stomped on them, and I made the sellers join in the romp, too.
But a seller comes out of it with $3,000. They might have only one eyeball hanging from their socket when they have emerged from the war zone, but by golly, they've got $3,000 clutched in their bloody fingers. That's the only reason to do a HAFA in California -- to get the bucks. For many, it's not worth it.
In a HAFA short sale, the seller cannot pay delinquent HOA dues. It's against federal regulations. Since the bank won't pay and the buyer doesn't have the money (because you know it will be a buyer with an FHA loan and minimum down), it means if this El Dorado Hills seller tries to do a HAFA, she will get rejected at the end. If her HAFA doesn't go through, the paperwork she signs may say she has to give Bank of America a deed-in-lieu of foreclosure.
She would be much better off offering on the front end to pay the HOA dues herself at closing. That doesn't violate the California Civil Code 580e as amended by SB 458. The question is does she want to help protect her credit rating or does she want to listen to the agent her next-door neighbor recommends who says a HAFA short sale is the way to go?
How much do you want to bet that this seller hires an agent who tells her to do a Bank of America HAFA short sale? That's not always the smartest idea. But people don't know. They rely on wrong advice all the time.
Case in point -- the other day I attended a short sale deficiency webinar while getting my hair colored. Watched it on my iPAD. The C.A.R. presentation include a live poll in which they asked attendees whether their short sale business was hurt at all by SB 458. Only 5% of them said yes. I tried to press "yes" but it didn't work on my iPAD. I thought to myself: What are the other 95% of you doing out there??
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Certified HAFA Specialist
My Sacramento Real Estate Listings
Elizabeth Weintraub is an author, home buying columnist for The New York Times-owned About.com, a Land Park resident, and a Land Park real estate agent who specializes in older, classic homes in Land Park, Curtis Park, Midtown and East Sacramento. Weintraub is also a Sacramento Short Sale agent who lists and successfully sells short sales throughout the four-county Sacramento area. Call Elizabeth Weintraub at 916.233.6759. Put 35 years of real estate experience to work for you. Broker-Associate at Lyon Real Estate. DRE License # 00697006.
The Short Sale Savior, by Elizabeth Weintraub, available at Amazon.com.
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The views expressed herein are Weintraub's personal views and do not reflect the views of Lyon Real Estate.
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