“Home Affordable Foreclosure Alternatives Program” or “HAFA” is a new program from the U. S. Treasury trying to make short sales shorter! Many homeowners and buyers have been plagued for waiting months for short sale approvals. Waiting up five months for a short sale approval is becoming the norm.
Here is a summary of the proposed short sale changes, who is eligible, and what you might expect to change if you do qualify for the HAFA program. What Treasury is trying to do is help streamline the short sale process by suggesting guidelines to the participating lenders.
ARE YOU ELIGIBLE?
You might be eligible for HAFA if your lender participates in the Home Affordable Modification Program (HAMP), and your mortgage is not underwritten by Fannie Mae or Freddie Mac.
- You have missed payments or are about to default.
- The home is your primary residence
- You got your primary mortgage before Jan. 1, 2009 and your balance is less than $729,750
- Your monthly mortgage payment is greater than 31% of your gross income
THE GOOD NEWS
- if you get a short sale through this program, there can be no deficiency judgment later. Your lender may not ask you for a promissory note or a cash contribution if they participate in HAFA and you do a short sale.
- You will receive $1500 relocation incentive upon closing your short sale.
OTHER THINGS you need to know:
- You cannot remain in the home as a tenant after closing.
- You must not be related to the buyer (arms length).
- You cannot earn a real estate commission if you are a licensee and sell the home yourself.
- You must maintain the property and pay association dues until it is sold.In California lenders have 2 choices for foreclosure, judicial or, the more popular, non-judicial foreclosure (trustee sale.) Odds are that a lender will pursue the trustee sale route because it is much cheaper. However, by taking the trustee sale route the lender gives up any right to pursue a deficiency.