HAFA Short Sale Guidelines and How They Can Help You

If the numbers are correct, 1 in every 7 homeowners is behind on their mortgage payment. Therefore the new Home Affordable Foreclosure Alternatives or HAFA Short Sale guidelines may do as much providing homeowners the option of disposing of their homes as the FHA mortgage program did for allowing people to buy a home.

Every day I look at the number of homes that are scheduled for auction and wonder “WHY?”. Of course I realize that some homes will be foreclosed on for a variety of reason, but then again I wonder how many of these could have been prevented through a bank approved Short Sale? If someone didn’t feel comfortable pursuing the process, felt it wasn’t worth the time or effort or just thought the attempt was futile, the game has just changed. And changed for the better!

Before the program went into effect, the guidelines were changed to make them more attractive. With these changes implemented, the parties to a short sale (homeowner, servicer, lender and investor) will now receive additional compensation which will encourage and increase participation. Notice I said compensation for the homeowner. Previously seller’s were prohibited from receiving any compensation at closing. They will now receive a relocation allowance upon the successful close of escrow.

What is HAFA?

The Home Affordable Foreclosure Alternatives program is administered by Fannie Mae and is under the direction of the US Treasury. It assists all Home Affordable Modification Program eligible homeowners to avoid foreclosure through short sales or deeds in lieu of foreclosure. There have been several programs introduced for homeowners and attempting to make sense of them all can be confusing. We have simplified the process. Check your government program eligibility with these quick surveys.

Details of the HAFA Program

Previously, a successful Short Sale could be an arduous task. In some cases banks were taking as long as 4-6 months to respond to a purchase offer from a distressed home seller. I believe HAFA is the result of a very proactive real estate community insisting that something be done to expedite the process. HAFA was introduced to simplify the Short Sale process and does so in the following ways:

Allows borrowers to receive pre-approved short sale terms prior to listing the property for sale
Requires that borrowers be fully released from future liability or debt
Utilizes borrower financial and hardship information collected in the HAMP process, no need for additional analysis.
Homeowners qualify for $3000 in relocation assistance after a short sale or deed-in-lieu has been completed
Lenders pay all servicing fees-no out of pocket expenses for homeowners.

Who is Eligible for HAFA?

Generally, if a homeowner is eligible for HAMP but cannot pay the mortgage, then they are eligible for an assisted Short Sale through HAFA. However, loan’s owned or guaranteed through Fannie Mae or Freddie Mac do not qualify. Find out here if Fannie Mae or Freddie Mac owns your loan. For a loan to qualify it must meet the following criteria:

The property is the borrowers principal residence
The mortgage is a first lien mortgage originataed on or before January 1, 2009
The mortgage is delinquent or default is reasonably foreseeable
The current unpaid balance is equal to or less than $729,750
The borrowers total monthly mortgage payment exceeds 31 percent of the borrower’s growss income

Other HAFA Terms & Conditions

There are some other restrictions on how the program operates. A seller cannot sell the property to a relative and it must be an arms length transaction. In addition, the seller is prohibited form selling the property and then renting it back from the new owner. Also there is an anti-flipping provision that states a new owner is prohibited from selling the property again for a period of 90 days. There is a process required for submission which has to be documented on their forms along with a very precise time line involved.

To help you understand the short sale process along with the guidelines for HAFA eligibility we have developed a special website which can be found at www.qualifyforashortsale.com There are free informative reports to address some of the concerns you may have or better yet give us a call. We specialize in distressed properties and have obtained the Certified Distressed Property Certification. A short sale is a great option compared to a foreclosure!