Real estate franchise giant RE/MAX International this week promoted new short-sale incentives as an alternative to foreclosure during a broadcast to affiliates across the country.

The presentation, which featured Laurie Maggiano, director of policy for the U.S. Treasury Department’s Office of Homeowner Preservation, among other speakers, coincided with the April 5 launch of the revisions to the federal Home Affordable Foreclosure Alternatives (HAFA) program, which is a part of the Home Affordable Modification Program (HAMP).

The new incentives provide that servicers can be paid $1,500 to cover administrative and processing costs related to a short sale or deed in lieu of foreclosure, investors can be paid up to $2,000 for allowing a portion of short-sale proceeds to go toward subordinate lien holders.

And up to 6 percent (to a $6,000 maximum) of the unpaid principal balance of each subordinate loan can be deducted from the sale proceeds in order to pay off subordinate lien holders. Also, homeowners can be eligible to receive $3,000 to assist with moving expenses.

"The new HAFA plan provides tremendous incentives for distressed homeowners and their lenders, which speeds up the short-sale process and provides a realistic alternative to foreclosure," said Dave Liniger, RE/MAX International co-founder and chairman, in a statement. "I believe short-sale transactions will increase significantly this year."

He also stated, "We sometimes forget that behind every distressed property is a distressed family, and we need to use every tool at our disposal to help them through a very personal crisis."

In a short sale, a lender allows a borrower to sell the home for less than the borrower owes on the mortgage.

Some real estate professionals have complained that the short-sale process is often long and frustrating for agents and consumers alike, with long delays common after buyers submit offers.

"For the past two years, Liniger and other RE/MAX executives have lobbied for a comprehensive overhaul of the short-sale process during numerous Washington, D.C., meetings with administration leaders, including Maggiano and the Treasury Department," RE/MAX stated in its announcement this week.

The company also announced that it had partnered with Equator Financial Solutions to provide training for agents and services — the company already provides an online transaction platform to Bank of America to help facilitate short sales. …CONTINUED

Equator’s HAFA-related tools have assisted clients in closing more than 150,000 short sales, said Chris Saitta, Equator CEO, in a statement. Saitta and Matt Vernon, a Bank of America senior vice president, also participated in the RE/MAX broadcast.

RE/MAX has promoted other distressed-property training for affiliated agents, and an estimated 15,000 RE/MAX agents have earned "Certified Distressed Property Expert" or "Short Sales and Foreclosure Resource" professional designations.

In determining the value of properties, the new HAFA incentives require that the service "must, independent of the borrower and any other parties to the transaction, assess the current value of the property in accordance with the investor’s guidelines."

With respect to real estate commissions, a Short Sale Agreement form for the HAFA program notes that the borrower or buyer cannot receive a real estate commission, and "Any commission that would otherwise be paid to you or the buyer must be reduced from the commission due on sale."

If the borrower submits an executed sales contract requesting servicer approval under HAFA before the Short Sale Agreement form is executed, then the amount of the real estate commission is the amount that was negotiated in the listing agreement, but cannot exceed 6 percent.

Loan servicers must furnish owners with a short-sale agreement outlining the amount of sale proceeds that will go toward real estate commissions, not to exceed 6 percent of the contract sales price. Also, servicers must provide notification and a payment amount when contractors were retained to assist listing brokers with the sale transaction.

Property valuations via broker price opinions, or BPOs, had been a subject of contention when the short-sale guidelines were proposed, with some appraisal groups opposing BPOs for HAFA valuations, citing fraud concerns, and the National Association of Realtors supporting the use of BPOs.

Lucien Salvant, an NAR spokesman, said that BPOs continue to be acceptable under HAFA. NAR has provided information about the latest HAFA short-sale policies at its Web sites, including a video detailing the process and associated paperwork.

"Short sales are beneficial to all concerned," Salvant said. "The seller avoids a foreclosure, the buyer purchases a home, neighbors avoid having a foreclosure in their neighborhood that can drag down home values, and the lender avoids having to lose $50,000-$100,000, which is typical when a home goes to foreclosure."

Mike Evans, president of the American Society of Appraisers, said in a statement Thursday that the appraisal group "will continue to work with the administration to ensure that appraisals are used in connection with short-sale transactions conducted under HAFA."


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