A major dog fight is underway, as licensed appraisers and real estate agents battle for business under the Obama Administration’s new Home Affordable Foreclosure Alternatives program (HAFA), part of the Making Home Affordable program (MHA). HAFA is scheduled to begin April 5, 2010.
Maggiano, director of policy at the Treasury’s Homeownership Preservation Office, the purchaser of a home that is being sold as a short sale must sign a Short Sale Agreement (SSA) as well as a sales contract attesting that transaction is an arm’s length one, meaning that they buyer and seller are unrelated by family, marriage or commercial enterprise.
[Note: it is not uncommon that homeowners in distress find a “buyer” for their homes who fits into one of the mentioned categories, who then either rents or sells the property back to the original party, who gets a new, often highly-discounted mortgage courtesy the lender and taxpayers. And yes, real estate agents who facilitate these transactions know exactly what is being done.]
Under HAFA, the Treasury Department requires that the new homeowner may not sell, aka “flip”, the property for 90 days and the lender must obtain an independent property valuation before agreeing to the sale.
The Real Estate Valuation Advocacy Association (REVAA) asserts that real estate agents can capably provide home valuations in the form of Broker Price Opinions, aka BPOs. The Appraisal Institute counters that not only are Realtors not trained to the level needed to perform an accurate property valuation, that sometimes the agent has a conflict of interest in that they are hoping to either get the listing for the property or bring their own buyer to make the purchase.
The National Association of Realtors also has an explanation of HAFA and HAMP and the guidelines for both on its website.