The Home Affordable Foreclosure Alternatives Program is aimed at forcing mortgage companies to set their minimum bid before a house is listed for sale. This is intended to encourage more short sales and cut out the run-around that seems so common.
Is it working though? Recently mortgage giant Fannie Mae announced penalties for homeowners who choose foreclosure as the easy way out instead of exhausting all other possible alternatives.
Those who don’t try to prevent foreclosure will have to wait at least seven years before they will be accepted for another mortgage. This simply makes the circle of debt and crisis an ever-tightening noose for those in society who can least afford it.
Tim Adams, a broker in California where almost 25 percent of the nation’s foreclosure activity can be found, says he’s excited about the new legislation and feels it will help to prevent foreclosure in many cases. Normally lenders don’t bother to work out how much they would accept on a short sale before they have a firm offer in hand.
“If (banks) put in their bottom line, that would make everyone’s life a lot easier,” he said. He used a property in San Bernadino as an example of how negotiations can entangle lives for a year or more.
“We had to start over four times,” he said. “The first time they lost all of our paperwork, then there were problems with (the financial software). They dragged it on for months. By the time it was over a squatter had moved in and we had to get him out.”
Matt Vernon, Bank of America’s executive in charge of short sales and foreclosed properties, is also optimistic that the legislation will help to prevent foreclosure as the only option facing homeowners. He feels the new Obama program “will give us a degree of efficiency that we have not had in the past.”
While banks perhaps need to be reined in to some degree, there needs to be a happy medium whereby all parties can operate comfortably..
“Loans are tougher to get now,” said Tim Adams. “We don’t want to put handcuffs on the banks. Overprotection can scare them.”
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