The CalHFA Short Sale and CalHFA Financing
We are fortunate in Sacramento to have a wealth of information at our fingertips by our sheer location as the state of California’s capital. There are also a lot of really excellent real estate agents in Sacramento whom this agent over the last 10 years has had the distinct pleasure of working with, as well as your usual run-of-the-mill whack jobs. We won’t talk about the latter because they don’t deserve chatter, except to acknowledge the occasional irritant will pop up in this business and it’s best to just step over them and get on with the business of buying and selling homes in Sacramento. Keep a positive attitude, that’s my motto!
One of the highlights of lending in Sacramento is the California Housing and Finance Agency, aka CalHFA. They assist first-time home buyers buy a home by securing a small second loan to the home. For a brief time last week CalHFA had pulled all funding and threw the homebuying market into a further panic. But then something happened and suddenly I received a notice that the funding was restored. Not that it will help buyers in most markets because those buyers are finding they are getting clobbered by the cash and conventional buyers.
There is another problem some homeowners in Sacramento are facing with CalHFA, though. The problem that arises is when a seller needs to do a short sale and discovers that CalHFA loan that they forget about. Those CalHFA loans need to be paid or a small portion needs to be paid in order for the short sale to be approved. With CalHFA being a government agency, it involves red tape and the agency is backlogged. It cannot possibly deal with the number of short sales it is trying to approve within a reasonable time frame.
You basically have two choices nowadays with a CalHFA short sale. You either wait the 90 or so days for CalHFA to respond to your request for a short sale — at which point the first lender might close the file on you — or you pay it off. Last winter, I closed a CalHFA short sale in Natomas under unusual circumstances.
I told the buyer it would be at least a 90-day wait for CalHFA. The second loan was pretty small, less than $10,000. The way prices are moving in Sacramento, 90 days could mean the home would sell for another $10,000. It might be smarter just to offer to pay off the second, providing the first lender will allow it, and close. That’s exactly what the buyer did. Paid off CalHFA. Makes you wonder if the delay for this processing is meant to induce payoffs, but I doubt CalHFA is that together. I don’t give a government agency that much intelligence.
But on another CalHFA short sale, we’ve been waiting since the first week in November for short sale approval from CalHFA. Since yesterday marked the 90-day point that is allowed before escalation, I asked CalHFA to escalate. The first is Bank of America, which said it will not extend past the end of February. Low and behold a miracle happened. I heard goldfinches singing in the yard. The sun came out from behind the clouds. My cats stopped puking. Was that the first robin of spring hopping about?
The negotiator at CalHFA picked up the file and asked for a few documents. Be still, my heart. I’ll get right on that. I like to take care of requests immediately. So do most of my short sale sellers. The seller emailed the documents the negotiator asked for, I put together the reports needed and sent her the package. Within an hour, the short sale was approved. In one day! CalHFA approved it, and we’re closing in 2 weeks. This is the fastest turnaround ever. And naysayers believe a positive attitude doesn’t pay off. Spittooey.