MN Realtor and Certified Distressed Property Expert
I’m including a summary of the latest US government program entitled HAFA (Home Affordable Alternatives Program) which is supposed to assist with short sales. While many are hailing this program will speed up short sales, I have my doubts.
Most government programs simply slow down the process instead of speeding it up and lenders are already overwhelmed by short sales and foreclosures. Adding Uncle Sam to the mix turns this into a witch’s brew.
Bottom line – will this help MN short sales get done faster? Only time will tell but here are a few caveats:
•If the short sale doesn’t work within the lender’s guidelines, you have to deed the house back to the lender, called a deed-in-lieu of foreclosure or “friendly foreclosure”. Bottom line is that you have a foreclosure on your credit record. Not good.
•If you have more than one lender, the MOST money the second lender can receive from the first lender is $3,000. The second lender may want more and can shut down the short sale.
MN Realtor and Certified Distressed Property Expert
•The lender may ask you to pay up to 31% of the mortgage during the process.
In the meantime, contact me at info@shortsalemnpro.com This e-mail address is being protected from spambots. You need JavaScript enabled to view it or 612-516-3456 for the latest in short sales news and information.
“Bringing you the best information and knowledge about Short Sales, so you can make the best decision.”
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On November 30, 2009, the Treasury Department released guidelines and forms for its new Home Affordable Foreclosure Alternatives Program (HAFA). HAFA is part of the Home Affordable Modification Program (HAMP). HAFA provides incentives in connection with a short sale or a deed-in-lieu of foreclosure (DIL) used to avoid foreclosure on a loan eligible for modification under the HAMP program. Servicers participating in HAMP are also required to comply with HAFA. A list of servicers participating in HAMP is available at MakingHomeAffordable.gov.
In 2009, the Treasury Department introduced the HAFA program to provide a viable option for homeowners who are unable to keep their homes through the existing Home Affordable Modification Program (HAMP). The HAFA program takes effect on April 5, 2010—although some servicers may implement it sooner, if they meet certain requirement–and sunsets on December 31, 2012.
Home Affordable Foreclosures Alternatives Program: Guidelines and Forms HAFA provides incentives in connection with a short sale or a deed-in-lieu of foreclosure (DIL) used to avoid foreclosure on a loan eligible for modification under the HAMP program. Servicers participating in HAMP are also required to comply with HAFA. A list of servicers participating in HAMP (including HAFA) is available at:www.makinghomeaffordable.com/contact_servicer.html.
HAFA Provisions
• Complements HAMP by providing a viable alternative for borrowers (the current homeowners) who are HAMP eligible but nevertheless unable to keep their home.
• Uses borrower financial and hardship information already collected in connection with consideration of a loan modification.
• Allows borrowers to receive pre-approved short sales terms before listing the property (including the minimum acceptable net proceeds).
• Requires borrowers to be fully released from future liability for the first mortgage debt (no cash contribution, promissory note, or deficiency judgment is allowed).
• Uses standard processes, documents, and timeframes/deadlines.
• Provides the following financial incentives:
• $3,000 for borrower relocation assistance;
• $1,500 for servicers to cover administrative and processing costs;
• Up to $2,000 for investors who allow a total of up to $6,000 in short sale proceeds to be distributed to subordinate lien holders, on a one-for-three matching basis.
• Requires all servicers participating in HAMP to implement HAFA in accordance with their own written policy, consistent with investor guidelines. The policy may include factors such as the severity of the potential loss, local markets, timing of pending foreclosure actions, and borrower motivation and cooperation.
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