In a recent post, I mentioned that I am more excited for April 5^th, 2010 (the day that the HAFA Program begins) than I am for my birthday or any other monumental occasion. I'm not necessarily excited because I believe that Obama will be giving me any great gifts on April 5^th, but I am eager to see how this program will unfold for sellers and agents participating in short sale transactions.

The California Real Estate Magazine summarizes some of the main tenets of the HAFA Program in its latest edition which hit my mailbox yesterday. Here are the main components of the program in a nutshell:

Sellers may qualify for the program if they meeting the following conditions:

• Property is a primary residence
• Borrower is delinquent or about to be delinquent on the mortgage
• Loan was made prior to 1/1/09 and is less than $729,750
• Total monthly mortgage payment exceeds 31% of (pre-tax) income
• Not a Fannie Mae or Freddie Mac loan

Borrowers must first attempt to qualify for the HAMP (loan modification program) and other alternatives. Borrowers may qualify for the HAFA Program if:

• They do not qualify for a Trial Period Modification
• They do not successfully complete the Trial Period Modification
• They are delinquent on the HAMP Modification
• They request a short sale or deed-in-lieu

According to California Real Estate Magazine, don't assume that if the borrower meets all of these qualifications, s/he will be able to participate. "The HAFA rules specifically give the power of approval to the lender, who can make the decision based on a number of criteria, including potential loss of value on the mortgage, and conditions of the local market."

The good news is that lenders who chose to participate in this program agree to the 6% commission to real estate agents. Even better, lenders are not permitted to pursue a deficiency judgment, cash contribution, or promissory note. Lastly, sellers may be offered a financial incentive of up to $1500 to participate in the program.

According to reports, only 170,000 HAMP loan modifications had been completed as of January 2009. Originally, the Obama Administration stated that they anticipated the HAMP Program to aid approximately 4 million borrowers nationwide. So, we've got a long way to go in order to see that number improve. How will this new HAFA Program fair in comparison to the HAMP Program? Only time will tell. Let's talk again after April 5^th!

See the entire 43 page Supplemental Directive Here

Broker, Realtor®
DRE #01324959
Broadpoint Properties, Inc
San Diego County Short Sale Specialists
Short Sale Expeditor® 

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