More About HAFA Short Sales
Sarasota Florida Homeowners Facing Foreclosure, this is good information to Read if you want to Avoid, Prevent or Stop Foreclosure. HAFA has made the Short Sale Process much easier and offers the homeowner added incentives to completed a Short Sale. The Troy Funk Team with Keller Williams Realty i Sarasota Florida has sold over 100 bank-negotiated sales in less than and year. If you need to complete a Short Sale, call us at 941-957-3737 or visit us at www.SarasotaFLShortSale.com Read More ...
The Home Affordable Foreclosure Alternatives Act may change the outlook for short sales. Read my first HAFA post if you don't know WHY the short sale process needed changing.
Homeowners should learn all their options before deciding on a short sale, but if short sale is the best choice for them, HAFA may make it happen more quickly and smoothly. (HAFA offers a short sale or deed-in-lieu alternative to foreclosure. This post will focus on the short sale path.)
Once you've decided short sale is your best option, and you've chosen a real estate agent, the next step is to call your servicer (lender) and ask if they are participating. If they are, they should go through the *HAMP process with you (qualify you for HAMP - this is required). If they offer you an alternative that you like, great! If not, just tell them you're requesting a short sale.
Once you request a short sale, servicer must assess the current value of the property. Servicer may order a preliminary title report. You may not be charged for these, but the fees can be added to the indebtedness against the home.
Servicer must also determine their minimum acceptable net proceeds. Servicer must consider reasonable and customary real estate transaction costs for the community where the property is located and describe the costs that may be deducted from the gross sale proceeds.
The servicer must generate a document called SSA (Short Sale Agreement). You must sign and return the SSA within 14 days from the effective date with a copy of the real estate broker listing agreement and information regarding any subordinate liens.
If the servicer will not agree to offer a short sale, they must inform you why in writing, and provide a toll free number for discussion.
Once an offer is received and signed by all parties, it must be delivered to the servicer within 3 days along with other forms and required documentation. This is where the RASS comes in - Request for Approval of Short Sale.
The servicer has ten days from the time all paperwork is received to either accept the offer (which they are required to do if it meets their pre-stated terms), or counter or reject the offer.
After successful closing of a short sale, borrower shall be entitled to an incentive payment of $3,000 to assist with relocation expenses. (No requirement for providing proof of relocation costs has been implemented that I can find, but you should retain all receipts, etc. just in case it's called for.) The servicer (lender) must instruct the settlement agent to pay borrower from sale proceeds at the same time that all other payments are disbursed. This amount must appear on the HUD-1 Settlement Statement.
Servicer must pay all out of pocket expenses, and may require borrower to waive reimbursement of any remaining escrow, buy-down funds or prepaid items, and assign any insurance proceeds.
Complications include a second mortgage or other lien holders. They must also give written commitment that they will release their lien and release borrower from all claims and liability relating to their lien(s) in exchange for receiving the payoff that is negotiated for them. They may not require contributions for borrower or real estate agent. Payments to any lien holders will be made at settlement from sale proceeds and must be shown on the HUD-1 Settlement Statement.
The first lienholder can receive reimbursement for paying off the following lienholders on a 3-for-1 basis (for every $3 paid to release a secondary lien, they receive $1 in reimbursement.
Monthly payments may be required from the borrower during the short sale process. These cannot be more than 31% of borrower's gross monthly income.
In order to qualify for a HAFA short sale, the home must be your principal residence. It cannot be abandoned. You must be living in the home unless a job transfer has required you to move at least 100 miles. Then you must provide documentation that you were required to move or were transferred, and it can only be up to 90 days before. You cannot have already bought another home.
* HAMP requires the servicer to apply a uniform loan modification process to provide eligible borrowers with sustainable monthly payments for their first lien mortgage loans. However, there will be situations where servicer is unable to approve a HAMP modification request, a HAMP modification is offered and not accepted by the borrower, or the borrower falls out of a HAMP modification. In those cases, the borrower may benefit from HAFA. (As a matter of fact, so far most situations are seeing these results.)
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I write posts on real estate issues and local events in the Denver metro area, especially those *communities between Denver and Boulder, as a public service. My hope is to give people an idea of the 'flavor' of our community, in case they're new or moving to the Denver area.
I am a residential real estate agent, happily helping folks buy a house or sell a house in the beautiful and friendly *suburbs northwest of Denver.
*Arvada, Broomfield, Lafayette, Louisville, Superior, Westminster; also Thornton, Golden, Wheat Ridge, Northglen, Lakewood
Read more about life between Denver and Boulder
Joetta Fort, Realtor 720-353-8031
Joetta.Fort@gmail.com
Between Denver and Boulder
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