What the New HAFA Short Sale Guidelines Mean

Real Estate Agent with Starlight Realty Certified REO & Short Sale Specialist

If you’ve been following the evolution of the federal government’s HAFA program, you’ve noticed a steady widening of the eligibility guidelines. That’s not an accident. In its original form the program failed to meet the lofty expectations placed on it by lawmakers, pundits and industry professionals. So, to its credit, the Treasury Department has worked hard to make it more effective—and more inclusive.

Here are a few of the areas where HAFA has evolved:

  • Income requirements. Servicers are no longer required to verify a borrower’s financial information or determine if the borrower’s monthly mortgage payment exceeds 31 percent of monthly gross income.
  • Timelines. The initial version of HAFA established timelines for most events , but gave no deadline for servicers to issue a Short Sale Agreement (SSA) after being approached by a homeowner. This gap was filled with the issuance of SD 10-18, and later, SD 22-02, which provide strict timelines for servicers’ response.
  • Vacancy. HAFA was devised primarily to reach owner/occupants, with some exceptions. When the success statistics were disappointing, the guidelines were gradually loosened until with the recent SD 12-02, all occupancy requirements were abandoned.
  • Junior liens. The original program capped payments to junior lien holders at $6,000. Now, that cap is $8,500, and only applies to mortgage liens. Non-mortgage liens may be paid at the servicers’ discretion.

The cumulative effect of all these adjustments will make HAFA accessible to a much wider swath of homeowners, and make the sales easier to close as well. That’s good news for agents, but for homeowners too—as well as the entire housing sector.

Comments (1)

Les & Sarah Oswald
Realty One Group - Eastvale, CA
Broker, Realtor and Investor

Lets just hope that HAFA follows its own guidelines. I am being positive and hoping it works and is able to help more homeowners this time around.

Mar 29, 2012 03:46 AM

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