New Government Short Sale Program – Home Affordable Foreclosure Alternatives HAFA. What is this exactly? Well the government initially announced forthcoming plans and guidelines back in May 2009, which was a bit premature, to coincide with the loan modification program put into place (HAMP). Since then nothing had been mentioned until Nov 30, 2009. On this date guidelines were released for servicers to follow if they want to collect on government (Treasury) paid incentives for doing short sales for homeowners. This plan is set to go into effect April 2010 and the second portion of the plan for Fannie Mae and Freddie Mac loans went into effect August 1st, 2010.
Below is a list of commonly asked questions about this program.
How does it help homeowners?
• Foreclosure is postponed for 120 days while the property is for sale.
• Streamlined short sale and deed in lieu (DIL) process; predetermined listing price, 10 day approval timeframe
• Homeowners will receive $3000 for move out expenses in a Short Sale or DIL
• Homeowners will be released of all future claims from the lender, i.e. no deficiency rights
• Lender will pay all fees associated with sale including real estate commissions
Who is eligible?
• Properties that are primary residence
• First mortgage originated on or before January 1, 2009
• Mortgage is delinquent or default is reasonably foreseeable
• Current unpaid principle balance is equal to or less than $729,750
• The borrowers total monthly mortgage payment exceeds 31% of borrowers gross income
• Homeowners must have been evaluated for a HAMP loan modification first, but homeowner can still request a short sale or DIL.
What does a homeowner need to do?
• Hire a Licensed real estate broker certified with HAFA and familiar with the HAFA guidelines to list property.
• Respond to lender request within 14 days to start program or they may not be eligible.
• Provide all information and sign HAFA documents required to verify program eligibility
• Cooperate with listing broker to actively market the property and respond to servicer inquiries
• Maintain the interior and exterior of the property in a manner that facilitates marketability.
• Work to clear any liens or other impediments to title that would prevent a sale
• Make reduced monthly payment stipulated by the lender if asked, or if applicable