Short Sale Lease Back – SSLB Program for Distressed Homeowners is one of the newer “Options” Available and is causing a wave of controversy. Here is why; HAFA Guidelines were amended in 2011 to allow Short Sale Lease Back (SSLB) as long as a Non-Profit Corporation registered as a 503 (c) is the purchaser. See Section 7.3 of Chapter IV of the Handbook. This SSLB Program is seeing some success in California and gaining momentum in other states by being used in advertising as a “Distressed Homeowner Option“. However, we see several caveats to these HAFA guideline amendments and the SSLB Program, as it has been presented. On the surface it appears to be like most government sponsored options and a major reason the Making Homes Affordable Programs have not seen the results expected, is that the Lender | Servicer has to first agree to participate, establish that they have implemented guidelines with HAFA, and that they then get to determine if you are approved or qualify for this “Option”. The criteria for this program is that you have to meet the following;
- Lender | Servicer approve or qualify home in advance
- Sale or transfer property to a Non-Profit Corporation
- viable or verifiable Hardship
- Pay fair market value in rent
- Stay in the home for three years
- Complete a Short Sale in this time frame to a Not for Profit Corporation, Not specified or monitored by HAFA
- Transaction for both the purchase, lease-back, and Short Sale have to be completed by this Non-Profit Group
Again, HAFA or as many government programs do, leaves the cooperative power in the hands of the Lender | Servicer and their Investors, through guidelines and approval stipulations. An Attorney | Broker in California pointed out, and we agree, that Fannie Mae and Freddie Mac have “Arms-Length Transaction” stipulations or restrictions, which comprises over 90% of the Distressed Home Loan Inventory. Thus, your margin of success is now limited to 10% of the remaining lenders | servicers | investors.
What concerns us even more, as evidenced by scenario’s being presented to the Grievance Committee in the Las Vegas Market, is how some are presenting and mis-representing variations of the original SSLB Program. These parties have been discovered, to some degree, to be preying upon Distressed Homeowners by offering enticing alternatives such as a purchase back solutions. It’s our belief these parties are taking advantage of Distressed Homeowner’s emotions that are wanting to stay in their homes at today’s prices.
Homeowners Be aware;
These abuses premised on this SSLB Program are not based on what’s being told to some Distressed Homeowners when they sign-up, it’s what’s not being disclosed, that is the concern!
“What if my Short Sale fails and I have already agreed to sell, my home to the Non-Profit Group? In fact, in one situation the home was already transferred via power of attorney and a quit-claim deed. Thus the answer was: Oh, didn’t we discuss the risks initially? Sorry and by the way, you have 30-days to move, if that….”
“Now that the house is still going to foreclosure, where did all my rent go to that I paid the Non-Profit Group and/or Investor while under review? The Answer: Oops, I’m sure we discussed this possibility, sorry and by the way, you have 30-days to get out, and no refunds……” This mis-use of the SSLB was done under the pretence to collect rents and never stay the foreclosure or assist in helping the homeowner.
“This was a great program, Thank you! I am on my feet again and ready to buy my house back. The Answer: Oops sorry, did we forget to mention that one of the conditions are that you cannot by your house back due to the lien holders policy on Arms-Length Transactions! Of course, you may continue to pay rent to the Non-Profit Corporation or current Investor.”
Understand that the SSLB Program does not allow for you to re-purchase your specific home. Thus, those advertising, may be over promising, or potentially misleading you to move forward with an SSLB option will not deliver on promises to keep you in your home past the three (3) year stipulation by the HAFA guidelines. Any party that hooks a Distressed Homeowner with the SSLB promise, which results in a flip for profit benefit raises concern.
The scenarios mentioned are current abuses of what we are already seeing in the Las Vegas Area.
The SSLB Program, though allowed by HAFA, has not evolved enough in this market. After hearing the Distressed Homeowner’s complaints of not keeping the negotiations in their directive control during the bank’s review of a loan modification, deed-in-lieu, deficiency release, or short sale, we believe there are much better options available that have fewer challenges and fewer opportunities for fraudulent practices, that can be accomplished with our assistance.
We are not sold on the SSLB Program, the complications created by the HAFA guidelines, or the willingness of lenders | servicers to participate other than on a limited basis. Thus, the Neighborhood Home Rescue Program will present the SSLB option benefits, in addition to the risks so, the homeowner has a better understanding.
We believe in the education of our clients as to all of the options available to them, by doing so, we have found the Homeowner to be able to make the healthiest decisions for themselves and their family while reaching for the best possible outcome. The information we and our network of consultants | contributors provide is at no cost and | or no advance fee consultations. See our most recent Video regarding Distressed Homeowner Options or schedule an appointment with one of our associates. We can assist you in knowing which is your best option in relation to your real estate needs and we look forward to helping you get the assistance you need to maneuver through this unprecedented Market. Please contact any Platinum Elite Associate by clicking our HomePage, E-mail us at Info@PlatinumElite.com, or call us at 702-869-9999.
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- Foreclosure Deals Drop as Banks Approve More Short Sales (solidassetinvestments.wordpress.com)
- Are Banks Stealing Homes from Homeowners? You Decide! (platinumelite.wordpress.com)
- Nevada lawmakers push for local Homeowner Bill of Rights (mortgagenewsblog.wordpress.com)