According to Elkhart Real Estate Agent Evelyn Johnston with Prudential One Realty, the National Association of REALTORS(r) recently reported on the Treasury Department's release of the 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 witha short sale or a deed-in-lieu of foreclosure (DIL) used to avoid foreclosure on a loan eligible for modification under the HAMP program. HAFA applies to loans not owned or guaranteed by Fannie Mae or Freddie Mac, which will issue their own versions of HAFA in coming weeks.
HAFA is a complex program, with 43 pages of guidelines and forms, designed to simplify and streamline use of short sales and deeds-in-lieu of foreclosure. HAFA:
- Complements HAMP by providing a viable alternative for borrowers (the current home owner) who are HAMP eligible biut 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).
- Prohibits the servicers from requiring a reduction in the real estate commission agreed upon in the listing agreement (up to 6 percent).
- 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 financial incentives: %1,500 for borrower relocation assistance: $1,000 for servicers to cover administrative and processing costs; and up to $1,000 for investors for allowing a total of up to $3,000 in short sale proceeds to be distributed to subordinate lien holders (on a one-for-three matching basis).
The program does not take effect until April 5, 2010, but servicers may implement it before then if they meet certain requirements. The program sunsets on December 31, 2012.
So, if you are behind in your Mortgage Payment, or expect to be, contact your Lender to make arrangements with them for a Short Sale or Deed-in-lieu of Foreclosure. Of the two options, the Short Sale is a much better way to avoid Foreclosure. A Short Sale will affect your Credit Rating for a much shorter period of time. A Deed-in-lieu of Foreclosure affects your Credit Rating dramatically AND is considered the same as a full blown Foreclosure.
To sell your home by a Short Sale, interview several REALTOR's(R), and choose one who is a Certified Short Sale Specialist. The process is complex and experience will smooth your way. Evelyn Johnston with Prudential One Realty is a Certified Short Sale Specialiest. and can be reached at 574-304-7148. It would make sense for you to google the REALTOR you are thinking about hiring to represent you and see what their reputation is!
