Major news in the short sale and housing industry! On Friday, March 9, the Obama Administration announced updates to the Home Affordable Foreclosure Alternative (HAFA) program. Created in 2009, HAFA is a government-sponsored initiative assisting all Home Affordable Modification Program (HAMP) eligible homeowners in avoiding foreclosure through short sales and deed-in-lieus.
The HAFA updates will go into effect on June 1, 2012, and will allow more distressed homeowners to seek assistance. Most importantly, the deadline for submitting for HAFA eligibility will be extended a full year, from December 31, 2012, to December 31, 2013.
Other major changes from March's updates to the HAFA program include:
- The removal of occupancy requirements. Previously, HAFA required homeowners to have lived in the property within the last 12 months.
- $3,000 relocation incentives will be limited to properties occupied by an owner or tenant at the time of the short sale.
- Mortgage payments will be allowed to exceed 31% of the homeowner's gross monthly income. This update will allow a homeowner to stay current on her mortgage and still qualify, minimizing the overall impact to her credit.
- Secondary lienholders may receive up to a maximum of $8,500, up from $6,000 previously.
- And one of the most dramatic changes: The Credit Bureau Reporting will be Account Status Code 13 (paid or closed account/zero balance) or 65 (account paid in full/a foreclosure was started), as applicable.
With these updates, a homeowner can be current on their mortgage, qualify for HAFA, continue to make their payments, and execute a short sale with minimum impact on their credit!
SEE BANK OF AMERICA CHANGES BELOW:
On April 2, Bank of America announced the latest round of changes to their short sale process. The changes, aimed at streamlining and expediting the process, include new requirements for initiating a short sale and changes to Equator.
Beginning April 13, 2012, Bank of America will require the following five forms to be submitted to initiate a short sale:
- Bank of America Third-Party Authorization Form
- IRS Form 4506-T â€" Request for Transcript of Tax Return
- 60-day Estimated HUD-1 (or HUD-1 with closing date if shorter than 60 days).
- Signed Purchase Contract including Buyers Acknowledgement and Disclosure
- Bank of America Short Sale Purchase Contract Addendum.
If you currently have a short sale file with Bank of America, you will need to complete any outstanding tasks in Equator before April 13. Look for the tasks titled "Submit Short Sale Offer," "Upload Offer Documents," and/or "Upload Supporting Documents."
If these tasks are not complete by April 13, you may be required to re-upload all documents to match the new system (that means five new documents, even if you were only missing one). Your file may also be declined, depending on your open tasks time compared to average timelines.
In addition to these new requirements, Equator will change to allow tasks (after the short sale is initiated) to happen simultaneously, rather than sequentially.
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