Home > Uncategorized > The Great Short Sale Bailout of 2010 (AKA – HAFA) – Finally!

The Great Short Sale Bailout of 2010 (AKA – HAFA) – Finally!

Have you had an opportunity to review the Homeowner Affordable Foreclosure Alternative (HAFA) plan which goes into effect on April 5, 2010?  If not, and if you’re involved in real estate, I encourage you to read through the 43 page plan (found by clicking HERE) as it has the potential to greatly streamline the short sale process.

As a short sale facilitator who has processed over 350 short sale requests, consumers and real estate professionals often approach me and inquire about the details of the plan.  In an effort to spare you the time of reading the 43 page document, I have outlined some of the key features below via a simple Q and A format. If you feel that I have left any crucially important information out, please comment so we can provide the most comprehensive data available to the consumer and the real estate community.

Q:  What is HAFA?
A:    HAFA stands for the Homeowner Affordable Foreclosure Alternative and is a part of the Homeowner Affordable Modification Program put into place previously by the Obama administration.  HAFA’s objective is to provide an alternative to foreclosure to those families struggling to pay their mortgage.   The alternative focuses on short sales and deeds in lieu of foreclosure.

Q:  Who is eligible to apply for HAFA assistance?
A:  The property must be a principal residence and the mortgage loan must have originated on or before 1/1/2009.  The mortgage may not be Fannie May or Freddie Mac as they are implementing their own program(s).

Q:  Must the mortgage be in default in order for the lender to approve the short sale request?
A:  The mortgage must be delinquent or default must be reasonably foreseeable.

Q:  Is there a cap on the mortgage that will be considered by HAFA?
A:  The maximum unpaid principal balance must be equal to or less than $729,750.

Q:  What are the income restrictions?
A:  The homeowner’s monthly mortgage payment must not exceed 31% of his/her gross income.

Q:  Can the bank seek a deficiency for any amounts uncollected by a short payoff?
A:  No!

Q:  Must the property be under contract before the bank will consider a short sale?
A:  No!  The homeowner and the bank will enter into a Short Sale Agreement (SSA).  In the SSA, the lender will stipulate either a required net amount to receive or a minimum sale price.

Q: Is there an incentive to the homeowner to apply for a HAFA short sale request.
A:   Yes.  If the sale completes, the homeowner may be eligible to receive $1500 from the closing proceeds to help with relocation expenses.  These funds are ultimately provided by the government but may be collected from the net proceeds at the closing.

Q: What is the term of the SSA?
A:   The SSA is for a term of 120 Days.  It may be extended.

Q:  What happens if the property does not sell?
A:  The SSA provides for a section which MAY allow the homeowner the ability to turn over the property via a Deed in Lieu of Foreclosure if the short sale fails.

Q:  How long will it take the bank to respond to a short sale request (assuming the SSA is in place)?
A:   Once the property is under contract, the homeowner submits a “Request for Approval of Short Sale” form to the lender.  The lender then has 10 days to approve the request.

Q: Once the sale is approved, how long will it take to close?
A:  Unless the buyer and seller agree otherwise, the lender must provide for a closing no less than 45 days from short sale approval.

Q: How do I learn more about HAFA?
A: Contact me by phone or email.  My contact information follows.  Click HERE to view the 43 page directive.

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