The Home Affordable Foreclosure Alternatives (HAFA) program is a part of the Home Affordable Modification Program (HAMP), and offers a streamlined process for short sales and deeds-in-lieu of foreclosure. HAFA will allow homeowners to discharge their first mortgage debt without the credit-destroying step of foreclosure. The program also offers a $1,000 incentive to banks to permit short sales and a $1,500 bonus to homeowners for the purpose of relocation.

• The property must be the owner’s principal residence

• The first mortgage must have originated before 2009

• The unpaid principal must be less than $729,750 for a single-family dwelling

• The borrower’s monthly payment must exceed 31% of their gross income

• The mortgage must either be delinquent or a default be reasonably foreseeable.

If borrowers meet the program requirements they will receive pre-approved short sale terms from their lender, which will include a minimum acceptable proceeds figure for the sale. The homeowner will be required to list the property for sale with a Realtor® and close within 120 day, extensions may be permitted up to a total of 12 months.

Based on the short sale agreement with the lender, HAFA requires property owners to be fully released from any future liability on their first mortgage debt, and in some cases, subordinate debts, so that when the home is sold, the borrower is free and clear of their mortgage.

The program ends on December 31, 2012. HAFA does not apply to FHA or VA loans. There is an extensive amount of paperwork to be completed to participate in the program, Homeowners wishing to take advantage of the relief offered are encouraged to work with a experienced Realtor®.

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Law Requires 2 Types of Smoke Detector Technology

The two most common methods of fire/smoke detection technology currently used is either ionization or photoelectric based.

Ionization sensors feature a constant current flowing between two electrodes. When smoke strikes the device, it impedes the current between the electrodes and causes the alarm to set off.  Ionization sensors are usually quicker to go off than photoelectric detectors. The problem with ionization detectors is that they are not able to distinguish between smoke and steam.  This makes them prone to false alarms when steam from a shower or other source interrupts the current. This is particularly true when the ionization detector is located near a kitchen or bathroom.

Photoelectric sensors send a beam of light between two sensors. This beam passes in front of the sensors in a direct line. When smoke cuts across the path of the light beam, some light is dispersed by the smoke particles causing it to activate the alarm. Photoelectric detectors are less sensitive to false alarms from steam or cooking exhaust fumes but may take longer than ionization detectors to operate. Another major concern is that ionization detectors do not offer the best protection in fires that smolder. Fires that smolder are some of the deadliest fires nationally. Photoelectric smoke alarms are more sensitive to smoldering, smoke producing fires. Most of the residential dwellings in the country have ionization detectors which are more sensitive to flames.

Tests of both types of alarms show that in smoke producing fires photoelectric detectors sound first and it takes nearly 17 minutes longer before an ionization alarm sounds.

New Fire Detector Regulations

Since there are strengths and weaknesses between photoelectric and ionization smoke detectors, the Board of Fire Prevention Regulation has passed a new regulation (527 CMR 32.00). According to the new regulation, owners of certain residential buildings will be required to install and maintain both the ionization and photoelectric smoke detectors. While the new regulation does not change the locations where smoke detectors are required, it does call for the installation of both technologies in certain locations.

Under the new regulation, an ionization detector can not be placed within 20 feet of a kitchen or a bathroom containing a shower or a tub. In these locations only a photoelectric detector is allowed.  In order to comply with the law you can either install two separate detectors that have both technologies or by installing one that utilizes both.

What Properties Are Affected By The New Regulation?

In order to determine if a property is affected by this change you may consider checking with the local fire department. According to the new amendment the following types of properties are impacted by the new regulation:

• Residential buildings under 70 feet tall and containing less than six dwelling units.
• Residential buildings not substantially altered since January 1, 1975, and containing less than 6 residential units.
• All residential buildings sold or transferred after April 5, 2010, which are less then 70 feet tall, have less than six units, or have not been substantially altered since January 1, 1975.

For all properties in these categories, compliance is mandated by April 5, 2010. It should be noted that the law does not apply to these larger buildings or those which were substantially altered since January, 1975, as these properties already were required to upgrade their fire safety systems under other existing laws.

One other important note regarding smoke detectors: Many towns require hard wired smoke detectors and NOT battery operated. You should make certain you know what the requirement is for the town where the property is located in.  As a general rule according to the State fire Marshall’s office, the law is as follows:

• Homes built after 1975 are required upon sale or transfer to comply with the State Building Code in effect at the time of construction.
• Homes built before 1975 are required upon sale or transfer to comply with the requirements of MGL c. 148, §26E(A); and
• Homes built between 1975 and 1998 are required to have hard wired interconnected smoke detectors outside the bedrooms and one detector on each floor at the top of the stairs. The smoke detector at the top of the stairs can be the same detector that is required outside the bedroom.
• Homes built after 1998, smoke detectors are required to be interconnected and have a battery backup. Smoke detectors are required in each bedroom, outside the bedroom and at the top of each flight of stairs. A single detector can satisfy multiple location requirements, if sited properly. There must also be one smoke detector on each level and one smoke detector for each 1,200 square feet of living space.
• The requirements for newer construction also apply to additions and/or renovations where a bedroom is either added or substantially altered. If an addition or renovation involves adding or substantially changing a bedroom, the entire house, including existing bedrooms must be brought up to the present standard according to the Massachusetts State Building Code (780 CMR), regardless of when the original home was built.Carbon Monoxide detectors are required in any residence that has fossil-fuel burning equipment including, but not limited to, a furnace, boiler, water heater, fireplace or any other apparatus, appliance or device; or has enclosed parking within its structure.

According to the carbon monoxide regulations, you need to have a detector on each finished level of the home. Further there must be a detector placed within ten feet of all the bedroom doors. The detectors do not need to be hard wired. A plug-in or battery operated detector meets the requirements and usually the most viable choice. Here are all the types are carbon monoxide detectors that are allowed:

• Battery powered with battery monitoring;
• Plug-in (AC powered) units with battery backup;
• Hardwired AC primary power with battery backup;
• Low-voltage or wireless alarms with secondary power; and
• Certain combination smoke detectors and CO alarms

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Here are the counties:

Massachusetts:

Bristol, Essex, Middlesex, Norfolk, Plymouth, Suffolk, and Worcester Counties.

New Hampshire:

Grafton, Hillsborough, Merrimack, Rockingham, Strafford, and Sullivan Counties

Rhode Island:

Kent, Newport, Providence, and Washington Counties.

 If you have questions please do not hesitate to call or email me.

David Bremer
Senior Loan Officer
978-302-0475 Direct
877-721-7051 Fax
david.bremer@prospectmtg.com
www.DavidProspect.com

According to the state Childhood Lead Poisoning Prevention Program as much as 30 percent of childhood lead poisoning cases in Massachusetts involve exposure to lead dust caused by renovation work.  That is a serious figure considering the devastating, life long effects of lead poisoning.  Homeowners who have work performed on their property by contractors, including painters, plumber, electricians and carpenters, must ensure that the contractor is “EPA Lead Safe Certified.”

The rule can be summarized in four parts:

1. Training and Certification
   Beginning in April 2010, firms working in pre-1978 homes will need to be certified. In addition to firm certification, an employee will also need to be a Certified Renovator. This employee is responsible for training other employees and overseeing work practices and cleaning. The training curriculum for certification, in development with the EPA, will be an eight-hour class with two hours of hands-on training. Both the firm and renovator certifications are valid for five years.
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2. Work Practices
   Once work starts on a pre-1978 renovation, the Certified Renovator has a number of responsibilities. Beginning with distributing EPA’s Renovate Right brochure to the homeowner and having them sign the pre-renovation form in the booklet. Before the work starts the Certified Renovator will post warning signs outside the work area and supervise setting up containment to prevent spreading dust.

   The rule lists specific containment procedures for both interior and exterior projects. It forbids certain work practices including open flame or torch burning, use of a heat gun that exceeds 1100°F, and high-speed sanding and grinding unless the tool is equipped with a HEPA exhaust control. Once the work is completed, the regulation specifies cleaning and waste disposal procedures. Clean up procedures must be supervised by a Certified Renovator.

3. Verification and Record Keeping
   After clean up is complete the Certified Renovator must verify by matching a cleaning cloth with an EPA verification card. If the cloth appears dirtier or darker than the card, the cleaning must be repeated. A complete file of records on the project must be kept by the certified renovator for three years. These records include, but aren’t limited to verification of owner-occupant receipt of the Renovate Right pamphlet or attempt to inform, documentation of work practices, Certified Renovator certification, and proof of worker training.
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4. Exemptions

• The home or child occupied facility was built after 1978.
• The repairs are minor, with interior work disturbing less than six sq. ft. or exteriors disturbing less than 20 sq. ft.
• The homeowner may also opt out by signing a waiver if there are no children under age six frequently visiting the property, no one in the home is pregnant, or the property is not a child-occupied facility.
• If the house or components test lead free by a Certified Risk Assessor, Lead Inspector, or Certified Renovator.
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In pending real estate transactions real estate professionals should be certain that homeowners are aware of the new regulations, particularly if a seller is doing renovations or repairs to the property in preparation for the sale.  Without doubt there will be a new form or two to be executed at the time of listing and or at closing.

Buyers purchasing properties constructed prior to 1978 (and there mortgage lenders) will certainly be looking for representation from sellers that the property is in compliance with the new regulation.  Expect to see new language included in purchase and sale agreements accordingly.

Of course the EPA has published a list of frequently asked questions about the RRP Rule:

Renovation, Repair and Painting (RRP) FAQ

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Economists project home sales rose 2.5 percent to a seasonally adjusted annual rate of 6.25 million, up from 6.1 million in October, according to Thomson Reuters. If accurate, it would be the third-straight increase and the best month for home sales since February 2007.

The National Association of Realtors’ report is scheduled for release at 10 a.m. EST Tuesday.

Loan modification – If you want to keep you home but cannot afford the current mortgage terms, you may be able get the lender to work with you to modify the loan terms. This is not an easy process either. You will need to provide much of the same financial information that you provide for a short sale. The lender must be convinced that the modification will be a long term benefit to them and an option that will also work for you. If the lender determines that modifying the loan will only postpone a short sale or foreclosure, they will not likely work with you.

Foreclosure – Foreclosure is the judicial process that the lender will pursue to take ownership of the property in order to sell to cover the amount due on the promissory note. A foreclosure will also dramatically effect your credit and your future ability to borrow, especial for the purchase of another home. If you do nothing about your current situation foreclosure is the inevitable conclusion. If the lender does foreclose and is able to sell the real estate for more than what you owed to them they are required to return the difference to you (after the payment of all of their costs and expenses).

Depending on the circumstances, you may be subject to pay tax on the amount of the deficiency between the foreclosure sale price and the amount owed on the note.

Deed in lieu of foreclosure – This is the process where you would deed all of your interest in the real estate to the lender. This process may also have financial ramifications, and you lose all legal interest in the property. However, this may be one of the simplest alternatives if the lender agrees to accept the deed. In any event be certain that you know all of the facts and how signing a deed in lieu of foreclosure could effect you.

Bankruptcy – This is often the last resort if you cannot sell the real estate and foreclosure is not an option for you. It is possible file bankruptcy and retain ownership of owning your home, but bankruptcy will severely damage your credit for at least seven years and you will not have control of your finances.

Get Professional Assistance -Even if you think a short sale is the right answer for you, and you think you can negotiate the terms and process on your own, consult with you professional advisers beforehand. Speak with a Certified Public Accountant, a REALTOR, a Real Estate Attorney and a Bankruptcy Attorney. Having the right advice can is key to a successful outcome.

The Federal Law imposed to protect consumers, as many others like it, is quickly becoming more of a burden then a benefit for the very consumer it is designed to protect.

There is an effort in the industry to encourage lawmakers to reconsider the HVCC. You can learn ore about the effort here and sign a petition that will be presented to lawmakers.

For those who may not be familiar with the code The Home Valuation Code of Conduct stipulates how appraisers, loan officers, lenders and real estate agents can handle the real estate appraisals in part it states that:

• A loan officer can NOT order the appraisal, and can not be involved with the selection of the appraiser;
• The lender must order the appraisal and must order it through a third party vendor (appraisal management company) that cannot be influenced by the lender, loan officer, appraiser or any other party to the transaction.
• If a second appraisal is needed it must be obtained from a second, unrelated, appraisal company.

The mandate of the institution of a third part vendor has caused a pricing shift. The cost of appraisals has not yet increased dramatically which means there is less of a profit now to be shared between the third party vendor (appraisal management company) and the actual appraisal company. The result is that appraisers with little or no experience are being used to reduce cost to the appraisal companies. Appraiser work loads are being increased and appraisers are working in unfamiliar markets/geographic areas.

Read more about the Home Valuation Code of Conduct here.

Sign the petition here.