HAFA Short Sales Have New Guidelines!
In order to make the HAFA (Home Affordable Foreclosure Alternatives) more efficient and friendly to homeowners, the Treasury Department has released updated guidelines for the HAFA program. HAFA lenders have received criticism about not having a standardized short sale process, missing timelines, and failure to comply with general rules.
In December, the California Association of Realtors (CAR) sent a letter to the Obama administration suggesting several items they thought would help the HAFA Short Sale Program become more uniform and better approved. The letter is in response to several problems Realtors® found while trying to process a HAFA Short Sale. The main issues CAR points out with the program are the long approval process, the lack of lender approvals, and the lack of monetary incentives to the lien holders. One of the main advertising points of HAFA was the 10-day response time to a request for a short sale approval, followed by a 45-day period to close the transaction. However, Realtors® and homeowners found that the lenders would still take 60-90 days to respond to the request for approval, causing many buyers to walk away from the home and the transaction to fall through.
Now, the new HAFA guidelines require the lender to respond to the request for short sale approval within 30 calendar days. The new HAFA guidelines also abolished the 6% cap to the subordinate lien holders, and the lenders are no longer required to calculate if the mortgage payments are 31% or greater of the borrower's monthly gross income.
What is the HAFA program?
If your mortgage payment is unaffordable and you are interested in transitioning to more affordable housing, you may be eligible for a short sale or deed-in-lieu of foreclosure through HAFA. The benefit of a HAFA short sale is that you are no longer responsible for the difference between what you owe on your mortgage and the amount that your home sells for. You will also receive $3,000 in relocation assistance upon successful closing of your short .
Eligibility*
You may be eligible to apply if you meet all of the following:
- You live in the home or have lived there in the last 12 months.
- You have a documented financial hardship.
- You have not purchased a new house within the last 12 months.
- Your first mortgage is less than $729,750.
- You obtained your mortgage on or before January 1, 2009.
- You must not have been convicted within the last 10 years of felony larceny, theft, fraud or forgery, money laundering or tax evasion, in connection with a mortgage or real estate transaction.
*Eligibility criteria are for guidance only. Contact your mortgage servicer to see if you qualify for HAFA.
To learn more about the new HAFA Short Sale program, please contact us today at 480-704-4042.
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