Refi—Or Short Sale?

Refi madness is sweeping Charlottesville and the nation. With the recent expansion of the federal government’s Home Affordable Refinance Program (HARP), banks have been deluged with phone calls requesting information. Call volume at Bank of America has been so high that they’ve had to refer requests to a “reservation system”, basically letting applicants know that they’ll get to them when they can.

With the new emphasis on refinancing, it may seem that short sales are out of vogue, but there are still plenty of homeowners that won’t fall into either the refi or mod basket. And as with any government program, many people will ultimately be excluded, and will need to move on to other solutions.

Here are a few points to remember in sorting out the candidates:

• HARP refis are still only available to borrowers who have been current for six months, and have no more than one late payment in the previous 12 months.
• Even eligible borrowers must find someone to perform the refi. Not all mortgage servicers are participating, and those that are may have their own eligibility overlays.
• HARP doesn’t address junior mortgages, such as HELOC’s, which are often the real problem for homeowners.
• Neither HARP nor most modification programs reduce principal balances. Thus, the underlying problem of equity loss is not remedied by either option.

That describes the people that won’t benefit from HARP. Here’s a description of those that would benefit from a short sale:

1. Borrowers that can’t afford any reasonable house payment
2. Unemployed homeowners
3. Owners of second homes they can’t sustain or don’t want
4. Homeowners that need to downsize
5. Those who must move for employment reasons
6. Borrowers that failed at a modification

That’s still a good-sized pool of people—and it’s not shrinking.

2012—the year of the refinance? Sure, for some.

The year of the short sale? Definitely.

Rob Alley, Realtor/Owner of Virginia Real Estate Solutions at RE/MAX Assured Properties
434-220-7133
roballeyrealtor@gmail.com
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