Short sellers in valley look for aid, left frustrated

The man on Sam Wagmeister's voice mail goes ballistic with a string of expletives warning a Realtor to stay (the bleep) away from him, not to call him or his wife, not to send any emails and that he'll get a (bleeping) court injunction if necessary.

That's the kind of frustration shown by Las Vegas homeowners trying to complete a short sale, or lender-approved sale for less than the principal mortgage balance.

Wagmeister said he was close to getting a short sale done when the bank asked for updated financial statements from the seller. When those weren't provided, the house went to foreclosure.

Government programs such as the Home Affordable Foreclosure Alternative, or HAFA, have been widely criticized as dismal failures in streamlining the short-sale process and providing incentives for borrowers and lenders.

Of Nevada's 687 applications for HAFA in the year since the Obama administration announced the program, 359 have closed, 253 are pending and 75 were cancelled, a U.S. Treasury Department official said Thursday.

"The results were underwhelming," said Laurie Maggiano, policy director in the Treasury's Office of Homeownership Preservation. "We went back to the drawing board and identified some problems impeding (loan) servicers and made some changes that would allow more borrowers to participate in the program."

Maggiano oversees the Making Home Affordable Program, aimed at helping millions of American families avoid foreclosure through refinance or loan modification. HAFA was closely tied to HAMP with extensive eligibility requirements.

The Treasury eliminated major impediments from HAFA such as income documentation and a requirement that the home be owner-occupied, Maggiano said. Another huge part is releasing borrowers of deficiency judgments on second liens.

"That impacts their credit and their ability to buy another home down the line and it allows borrowers to recover financially," Maggiano said. "This is about keeping owners in their homes with affordable mortgage payments. If more short sales could be approved, it would help values of all homes in a community."

Maggiano came to Las Vegas on Wednesday to follow up on a recent meeting in Washington, D.C., with real estate agents, mortgage company representatives and loan servicers from five states hit hardest by the housing downturn.

Mike Young, president of Nevada Association of Realtors in Reno, said he was impressed with Maggiano's efforts to educate people on how to take advantage of the government program.

HAFA didn't get much use in Nevada, but at least it established guidelines on paying $3,000 to borrowers, $1,500 to loan servicers and $6,000 to settle second liens, Young said. That structure needs to apply to all lenders, not just those participating in HAFA, he said.

"Some of the big lenders were all over it, like Wells (Fargo) and Bank of America," Young said. "They seemed to have investors in their portfolio and servicers who know the parameters."

Maggiano said the only requirement for servicers is to document borrowers' hardships.

"This is not a program for people who can afford to make their payment and choose not to, but for those in need," she said. "With the highest unemployment rate in the nation, you truly have enough borrowers who can't afford to live in the homes they're in and they need a graceful exit."

Contact reporter Hubble Smith at hsmith@reviewjournal.com or 702-383-0491.