New Math Equation: HAMP + HARP + TARP = DUD

I recently read this great article on It took a look at the Making Home Affordable programs and how they were intended to help millions of struggling homeowners. The only thing it appears it has done is spend hundreds of billions of tax payers money and frustrate thousands of people. What are your thoughts on the Making Home Affordable Program? Has it helped you?

It seems all that these programs are doing is spending money and delaying the inevitable…a giant wave of foreclosures.

Earlier this year, the Making Home Affordable program was unveiled to help 3.2 million struggling homeowners stay in their homes either through a loan modification or a refinance. Program names with easy-to-remember acronyms were created:

* HAMP — Home Affordable Modification Program. This is for people who are having a tough time paying their mortgage, perhaps because their interest rate has increased or they have less income.

* HARP — Home Affordable Refinance Program
. This is for people who pay their mortgages on time but are not able to refinance through conventional means and therefore, cannot take advantage of today’s lower mortgage rates perhaps due to a decrease in the value of their home.

To help support HAMP and HARP, TARP was created. The Troubled Asset Relief Program, or TARP, is a huge $700 billion bailout plan in which Congress infuses banks with hundreds of millions of dollars with the idea that banks will use these funds to do HAMP and HARP loans. Sounds easy enough.

So, what’s the problem?

Simply, it’s not working.  This week, government officials reported to the House Financial Services Committee that 70 percent of borrowers who have signed up are not getting help. Reasons?

* J.P. Morgan Chase says 29 percent of borrowers it signed up for the program did not make their new, cheaper mortgage payments.
* Bank of America said that about 65,000 of the borrowers it has helped made initial payments as required, but 50,000 of them have either not submitted all of the required paperwork or show some discrepancy in the information — putting them at risk of losing the aid.

So, it sounds like borrowers are not getting their act together, right? Wrong, according to Richard H. Neiman, New York’s top bank regulator and a member of the Congressional Oversight Panel, who said:

“We have anecdotal evidence that consumers continue to face major issues with servicers such as JPMorgan Chase and Bank of America losing their documentation or not clearly explaining the modification process to begin with.”

Or, perhaps there’s some other reason lenders won’t modify your loan.

What’s next?

Some ideas tossed about include:

* Offering a program similar to one in Pennsylvania in which unemployed workers are given low-interest loans to pay their mortgages. Eligible borrowers can get loans up to $60,000 that can be repaid over an extended period with payments as low as $25 a month.
* Continue working to get borrowers out of trial modifications and into permanent modifications.
* Streamline the documentation process and create an online portal for tracking and submitting documents.
* Pass a mortgage “cram-down” bill that stalled in Congress earlier this year which would let federal judges lengthen mortgage terms, cut interest rates and reduce loan balances for homeowners in bankruptcy court, even if the lender objects. (Or, get really crazy and do something like this judge did in Long Island).

Unfortunately, time is ticking and these ideas cannot be implemented quickly enough to keep up with the looming deadlines for these trial modifications, the increasing unemployment rate and rise in foreclosures.

If you are a troubled landowner, or have a family member or friend facing foreclosure, please give us a call for a confidential consultation about the possibility of a short sale.  Call Craig Baranowski at 850.259.1788 or email  us @ Team Baranowski has a 100% success rate for all of our short sales for 2009!

This site, Craig Baranowski or Keller Williams Realty is not providing legal or tax advice. The information provided is for educational and informational purposes only. It is recommended that sellers considering a short sale should consult an independent legal and tax adviser for more information.

New Short Sale Guidelines Encourage Sweeping Changes to Short Sale Process

It has been a very long year fighting everyday to save homeowners from foreclosure. It is a daily challenge to push short sales efficiently and effectively through the short sale process. I have been actively involved in national short sale advocacy groups and we have been demanding changes to a broken short sale process. Two years ago when we started our first short sales, it was a difficult path of paving a road never traveled. As short sales become more prominent we saw changes and guidelines help streamline and encourage lenders to participate in foreclosure prevention programs under the Making Home Affordable Program or Home Affordable Alternatives Program (HAFA). These programs encouraged mortgage modifications and offered some incentives for shorts sales and deed in lieu of foreclosures. However, the program struggled to offer real solutions to an epic problem plaguing our country’s real estate market.

Today’s announcement by the Treasury Department is the next critical and potentially monumental step to making a difference in offering homeowners a real foreclosure alternative. With over 88% of our distressed inventory in Okaloosa, Walton and Bay County being short sales…this is a very significant and much needed change…or as I would call it the necessary lifeline to get through this current real estate crisis. The plan is designed to accelerate the necessary agreements between lenders, real estate agents, buyers and sellers.

Here is a quick break down of the new guidelines…will it change short sales overnight? No. But we have yet to see the bulk of short sales and 2010 will be an epic year for short sales and foreclosures!

The program’s official name is the Home Affordable Foreclosure Alternatives Program (HAFA), and it’s part of an existing initiative, the Home Affordable Modification Program (HAMP). HAFA applies to loans not owned or guaranteed by Fannie Mae or Freddie Mac, which cover over half of all U.S. mortgages; however, Fannie and Freddie will issue their own versions of HAFA in coming weeks.

While HAFA’s goal is simple – increase the number of short sales and “deeds in lieu of foreclosure” by simplifying the process – the rules are complex, and it comes with 43 pages of guidelines and forms. Among other things, HAFA:

Allows borrowers to receive pre-approved short sales terms before listing the property (including the minimum acceptable net proceeds).

• Prohibits servicers from requiring a reduction in the real estate commission agreed upon in the listing agreement (up to 6 percent).

• Requires borrowers to be fully released from future liability for the first mortgage debt (no cash contribution, promissory note, or deficiency judgment is allowed.)

• Provides financial incentives: $1,500 for borrower relocation assistance; $1,000 for servicers to cover administrative and processing costs; and up to $1,000 for investors.

The program does not take effect until April 5, 2010, but servicers may implement it before then if they meet certain requirements. The program sunsets on Dec. 31, 2012.

To qualify under the new guidelines:

  • The property must be the homeowner’s principal residence.
  • The homeowner is delinquent on the mortgage or default looks likely. Homeowner is insolvent.
  • The loan was made before Jan. 1 this year and is less than $729,750
  • The borrowers’ total monthly mortgage payment exceeds 31 percent of their before-tax income.


Read the complete 43 page SHORT SALE GUIDELINES

If you are a troubled homeowner, or have a family member or friend facing foreclosure, please give us a call for a confidential consultation about the possibility of a short sale.  Call Craig Baranowski at 850.259.1788 or email  us @ Team Baranowski has a 100% success rate for all of our short sales for 2009!

This site, Craig Baranowski or Keller Williams Realty is not providing legal or tax advice. The information provided is for educational and informational purposes only. It is recommended that sellers considering a short sale should consult an independent legal and tax adviser for more information.

Bank of America formerly Countrywide short sale process streamlined?

Update: Bank of America Positive Changes to Their Short Sale Program

Countrywide was one of the largest home loan providers in the United States, as a result they have been overwhelmed with a staggering number of foreclosures and short sales. During the last twelve months they have received a large amount of bad press and has earned a bad reputation for taking an excessively long time to process a short sale. In some cases Countrywide has taken as long as 8 to 9 months to approve a short sale. In the process the seller get discouraged, buyers walk from the transaction and Realtors lose faith in a system that seems fundamentally broken. Bank of America’s purchase of Countrywide appears to have only exacerbated the problem.

In recent months we have seen and heard of talks about a streamlined short sale process and incentives being put in place by the Obama Administration under the Making Home Affordable Program. This program is targeting to prevent homeowners from foreclosure with alternative options including mortgage modifications, short sales and deed of lieu of foreclosures. You can read more about the program here.

We have yet to experience any tangible changes to Bank of America’s short sale process however, this letter to one of our customers is a sign that they are acknowledging and trying to define a standardized short sale process. In this letter Bank of America is expecting the short sale process to take 30-40 days to complete. If the loan was sold to an investor it will take an additional 20 days to process. This would make the entire process from start to finish 60 days. Our experience with dozens of  Bank of America – Countrywide short sales has been anywhere from 3 months to 6 months.

If we could get close to a 30-40 day turn around on short sales with Bank of America it would be almost magical and welcome any changes to improve the process. Click here to view the letter from Bank of America.

Relief for military homeowners in financial distress

The economic downturn and the crashing of the real estate market have put millions of homeowners in financial distress. This financial crisis has spread far and wide and is impacting members or our military who are forced to sell their homes in a down market due to a relocation. Military homeowners who must sell their homes for a loss after receiving transfers orders are eligible for aid that could mean thousands of dollars in reimbursements from the federal government. Recently, the Departments of Defense has published guidelines for a $555 million program to help military families that have had to relocate.

Members of the Armed Forces permanently reassigned during the mortgage crisis can recieve aid if they meet these guidelines:

1. Permanent reassignment requires move of more than 50 miles.

2. Reassignment ordered between 1 February 2006 and 31 December 2009.

3. Property purchased (or contract to purchase signed) before 1 July 2006.

4. Property sold by owner between 1 July 2006 and 1 May 2010.

5. Property was the primary residence of the owner

6. Owner has not previously received these benefit payments.

To find out more information visit the DOD HAP website by clicking here.

If you do not directly qualify for this program, there are more options under the Servicemembers civil Relief Act (SCRA). It is important to remember that lenders and working hard to help homeowners prevent foreclosure especially for our military. Foreclosure alternatives include; forbearance, reinstatement, short sale, mortgage modification and deed in Lieu of foreclosure. You can read more about these terms here.  It is in the lender’s best interest to help you.

Obama Administration announces uniform Short-Sale Guidelines

Daily Real Estate News | May 15, 2009 |

Uniform Short-Sales Guidelines in the Works
Extensive delays in the short-sale process has caused many buyers to go elsewhere and have left would-be sellers with no option but foreclosure. But the picture is improving.

This week the U.S. Treasury announced that it would be providing incentives for borrowers and mortgage services to pursue short sales and other foreclosure alternatives. The program includes a standard short-sales process flow, minimum performance timeframes, and standard documentation, the U.S. Treasury says.

(More information is available on the Treasury Web site and in this PDF document.

The incentives and process guidelines are part of a larger initiative called Making Home Affordable, which helps home owners refinance to avoid losing their home.

“NAR is pleased that the government is stepping in to help prevent foreclosures by streamlining the short-sale and deeds-in-lieu process,” NATIONAL ASSOCIATION OF REALTORS® President Charles McMillan said in a statement. “NAR has been calling for uniform short sales procedures and other initiatives that will help today’s home owners in challenging economy.”

More Collaboration Needed

A panel of experts at the 2009 REALTORS® Midyear Legislative Meetings this week agreed with NAR’s position that more needs to be done to streamline short sales.

“It’s hard to find the right person to talk to, you send in multiple forms multiple times, you’re not sure if the forms were received or processed correctly,” said Marcel Bryar, deputy general counsel and vice president at Fannie Mae.

To reach a set of standards that suits everyone, the government should collaborate with lenders, the real estate industry, and advocacy groups, he said.

“The process is going to take a while,” said David Knight, head of the short sales division at Wells Fargo. “Getting them all to understand what we can all live and deal with is not going to be easy, but that is exactly what’s going to have to happen.”

Panel participants applauded the Obama administration’s efforts to streamline the short sales process, and encouraged the real estate industry to get more involved in formulating this standard.

“It’s going to take some thorough intervention,” said Boyd Campbell, a Washington, D.C.-area REALTOR®. “That’s why I think it’s so important for RPAC to get involved and make sure NAR has the resources to go in and help resolve this problem. This doesn’t just impact us as practitioners. It also impacts all of our homes and communities.”

-Brian Summerfield, REALTOR® Magazine
If you or someone you know is looking at buying or selling distressed property…rely on the experts, The Distressed Property Experts of Team Baranowski!
Note: The information provided is for informational purposes. No legal advise is given or implied. Please check with a qualified attorney in your area.

Making Home Affordable Program – the Obama Housing Plan

On February 18, 2009, President Obama announced his Making Home Affordable Program, designed to help up to 7-9 million families avoid foreclosure by restructuring or refinancing their mortgages. This plan is designed to not only help responsible homeowners behind on their payments or at risk of defaulting, but prevents neighborhoods and communities from being dragged over the edge too, as defaults and foreclosures contribute to falling home values, failing local businesses, and lost jobs.

More detailed information can be found at

Guidelines to the Making Home Affordable Program

The Obama Administration announced the new U.S. Department of the Treasury guidelines. These guidelines enable servicers to begin modifications of eligible mortgages under the Administration’s Making Home Affordable Program – announced by President Obama on February 28, 2009.

Here are the key elements of the Obama plan summarized by the National Association of Realtors:

1.  The Home Affordable Refinance Program.  Under this program, eligible borrowers may refinance loans that Fannie Mae or Freddie Mac (the government sponsored enterprises, or GSEs) own or guarantee.  The program can help homeowner-occupants who are current in making loan payments and have loan-to-value ratios (LTVs) above 80 percent but not more than 105 percent.  Cash out refinancings are not permitted.  The program ends in June 2010.

2.  The Home Affordable Modification Program.  This is a $75 billion program with lender, servicer, investor, and borrower incentives to make it work.  The program is limited to homeowner-occupants who are at risk of default or already in default and who have loans at or below the maximum GSE conforming loan limit of $729,750 (or higher for 2-, 3-, and 4-unit properties).  Loan modifications under the program may be made until December 31, 2012.

3.  More Support for the GSEs.  President Obama also announced more support for the GSEs, including doubling of potential Treasury investment from $100 billion to $200 billion for each GSE, to maintain their positive net worth.  The plan also raises the cap on mortgages that the GSEs may hold in their portfolios by $50 billion to $900 billion.

If you are behind on your mortgage or know a friend that is behind on their mortgage please direct them to This is an excellent resource to determine if you are eligible for a Loan Modification. 

If you do not qualify for a mortgage modification and need to sell your property. Please give us a call. We can help!