The first thing is that rental properties are now eligible for short sale to actually get $3000 for relocation fees for the tenants or anybody who is living on that property. And that could help out with transactions that we do deal with many times are investment properties where tenants aren’t simply willing or able to move out, that it does offer $3000 for them.
The next thing that had changed is that they have increased the amount of money that can be paid out to second lien holders to $8,500. This is extremely important here in California with there no longer be recourse in second loans. Banks are many times asking for more money if they are in second position to allow a short sale to occur. So this will give some more flexibility for homeowners to able to participate in HAFA and be able to get the $3000 dollars for relocation expenses.
The next is change is borrows can now actually be current and still qualify for the short sale. They are going to look at your income and expenses but it’s not a requirement any further that you have to be behind.The other thing that they have changed is they will allow homeowners to make full payments during the process of the short sale if they want to. Whereas before they did ask in some certain instances to make partial payments. That’s not a requirement if the homeowner wants to make payments they can so they can protect and preserve their credit a little bit further.
The next change that they have also made is they’re very specifically pointing out which codes are going to be dictated and how it needs to be reported by the servicer in their credit when the short sale occurs. So they have changed and made up some new status account codes. One is 13 which simply states that the property has been paid or the account has been closed with zero balance or that they can be reported as code 65 meaning the account is paid in full and foreclosure was started whichever is applicable.
All of these new changes do go in effect starting in June 1st of this year 2012. The guidelines have already been set forth, it’s just a matter of getting them implemented and initiated.
Many times we do see changes like this it does take the bank a couple of months if not weeks to get adapted to these new changes but it is important for homeowners to understand that if they are looking for relocation and moving expenses that the guidelines have been extended and enhanced a little bit further.
Thank You very much for listening to my presentation: What about the NEW HAFA Program Update 3-19-2012.