As more home owners have fallen behind on their mortgage payments, foreclosures and short sales have become more of a common occurrence in the Greater Rochester region and across the nation. A short sale is a sale of a property where the sale price falls short of the balance owned on the loan. The lender must agree to and accept less than the total amount due. In some instances, a short sale may be a better alternative to foreclosure because it helps avoid hefty fees for the lender and has less of a dramatic impact on a borrower’s credit rating.

While there are loan modification and other programs that can assist homeowners, not everyone will qualify. For many who are at risk of losing their home through foreclosure, a new program from the United States Treasury Department may help.

In February 2009, the Obama Administration introduced the “Making Home Affordable Program.” The plan is intended to stabilize the housing market and help struggling homeowners remain in their homes. One option is to modify mortgages to make them more affordable through the Home Affordable Modification Program (HAMP). While many homeowners have received help through HAMP, far too many will not be able to keep their home even with a loan modification. For those homeowners, the Treasury Department has established a new short sales program called the Home Affordable Foreclosure Alternatives Program (HAFA). HAFA is designed to streamline short sales by providing a uniform process, standard forms, and incentives for families and their mortgage servicers to complete the process. It offers homeowners who sell their homes under HAFA, $3,000 to help cover their moving costs.

On June 1, 2010, Fannie Mae and Freddie Mac released guidelines for implementing the HAFA program. Servicers were required to implement these policies no later than August 1, 2010. While largely consistent with the HAFA guidelines for non-GSE mortgages, Fannie and Freddie have each made some important differences. To be eligible under the non-GSE HAFA program, the borrower must be delinquent or default must be reasonably foreseeable. Under Freddie’s requirements, a borrower must be more than 60 days delinquent and have cash reserves less than the greater of $5,000, or three times the current monthly mortgage payment. Fannie allows borrowers to be at imminent risk of default. Fannie also prohibits a borrower from participating in HAFA, if the borrower has the ability to continue making the mortgage payments but chooses not to do so (sometimes called strategic default); has substantial unencumbered assets or significant cash reserves equal to or exceeding three times the borrower’s total monthly mortgage payment or $5,000, whichever is greater; or has high surplus income. Fannie and Freddie allow for servicer incentives of $2,200 for a short sale and $1,500 for a deed-in-lieu of foreclosure (DIL). This is in contrast to the $1,500 servicer incentive for both a short sale and a DIL for non-GSE mortgages. For both Fannie and Freddie, each subordinate lien holder in order of priority may be paid no more than 6% of the unpaid principal balance of its loan, until the $6,000 cap is attained. This policy remains unchanged from the non-GSE HAFA program. Consistent with the non-GSE HAFA program, Fannie and Freddie guidelines do not permit subordinate lien holders to require contributions from the real estate agent or borrower as a condition for releasing its lien and releasing the borrower from personal liability. 2

The Greater Rochester Association of REALTORS® recommends that anyone who is at risk of foreclosure or considering a short sale to first seek the advice of a real estate attorney or financial advisor who can discuss various options and alternatives to ensure that their best interests are protected.

*Some of the information contained in this article was provided by the National Association of REALTORS®

Although nationally builder confidence is at a 12 month low, Home Builders in the Rochester/Finger Lakes area are much more optimistic.

“Real estate and building is local.” said Craig Antonelli, President of Antonelli Construction, and 2010 Chairman of the Rochester Home Builders’ Association. ” Our job market is steady and we have a strong community that works together. We have seen the worst of the slow down in the home building industry and we are now moving forward again.” Antonelli added.

The Rochester Home Builders’ Association reported an increase in building permits the first half of 2010. Increases in Monroe, Ontario and Wayne County were over 20 %.

“Certain markets continue to build.” said Rick Herman, Chief Executive Officer of the Rochester Home Builders’ Association. “There was a tremendous amount of market movement in the first half of the year due to the tax credit. That helped pre-existing homes which then helped the new home market as well.” Herman said.

“Most builders agree that 2010 will be a slow re-building year and that in 2011 we will see more normal numbers.” said Antonelli.

The REALTORS® Charitable Foundation (RCF), the philanthropic arm of the Greater Rochester Association of REALTORS® (GRAR), announced its most recent grant award of $5,000 to the Bishop Sheen Ecumenical Housing Foundation, Inc. (Sheen Housing). The money will be used specifically to fund the Emergency Home Repair program, which helps lower income families, seniors, and persons living with disabilities, in order to achieve safe, decent housing.

Representatives from both the RCF and Sheen Housing attended a check presentation ceremony at the offices of the Greater Rochester Association of REALTORS® on June 8.

“We are pleased to support this very worthy program, which provides vital community services to people in need,” stated Cindy B-Rosato, chair of the RCF board of directors.

Sheen Housing Board President Patrick Cusato expressed his appreciation of the award on behalf of the organization. “Given today’s tough economic situation, lower income families are barely keeping their heads above water. They do not have the additional resources to make home repairs and still pay the mortgage, utilities, food, and other household costs.”

“I am particularly proud that this gift will assist so many by creating thriving, sustainable neighborhoods, jobs for local contractors, community revitalization support, and provide better housing in a stronger community,” added Kevin LoCicero, Bishop Sheen board of directors vice president.

Since its inception in 2001, the RCF has awarded over $430,000 in grants to 35 local non-profit agencies. The organization receives its support from area REALTORS®, the Greater Rochester Association of REALTORS®, proceeds received from the annual RCF Golf Classic held in July, and various other fundraisers.

To learn more about the REALTORS® Charitable Foundation and how you can support its efforts, visit www.rfoundation.org.

Real estate statistics released by the Genesee Region Real Estate Information Services (GENRIS), the information subsidiary of the Greater Rochester Association of REALTORS® (GRAR) revealed an impressive second quarter.

GRAR officials reported a 43% increase in sales when compared to second quarter 2009, with a total of 3,512 homes sold. In addition, the overall median sale price of $120,000 reflected a 2% percent increase compared to last year. The increase in purchases was a result of home buyers who still had time to take advantage of the $8,000 First-time Home Buyers Tax Credit and the $6,500 Tax Credit for current home owners who purchased a new or existing home. The tax credit expired on April 30, 2010. Those who qualified for the tax credit had until June 30 to close on their purchase. Pending sales were down, as expected, as people were rushing to close on their homes before the closing deadline. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.

Recently, both houses of Congress passed a bill that extended the deadline for home buyers to close on their purchases and still claim the tax credit. President Obama signed the bill into law on July 2. Under the measure, buyers now have until September 30, 2010 to close on homes that went into contract by April 30. 2010.

“The tax credit was a critical factor in generating home sales and maintaining the momentum of the real estate market into the second quarter,” stated Carolyn Stiffler, GRAR board president. “The program definitely had a positive impact on our local market and was an enormous benefit to homeowners.”

Stiffler stated that she anticipates sales to be steady and brisk through the third quarter.

“Although the tax credit incentive has expired, this is still a great time to buy a home,” remarked Stiffler. Mortgage rates are still at an all-time low and this is a wonderful opportunity for people to take advantage of our very affordable and stable real estate market.”

There were some impressive sales results in several towns within Monroe County. Notable increases were realized in Brighton, Pittsford, Henrietta, Webster, Perinton, Ogden, Parma, and Sweden/Brockport.

GRAR will continue to support the local residential real estate industry through its TIME2BUY marketing campaign, which focuses on the benefits of owning a home and using the services of a REALTOR® when buying and selling a home.