HAFA Government Short Sale Program
If you are a struggling homeowner who is experiencing some kind of financial hardship and can no longer afford your mortgage payments, then the Home Affordable Foreclosure Alternatives Program may just be for you. The HAFA program makes available options to avoid a foreclosure as well as offer cash back incentives to homeowners, servicers and investors to move forward with a short sale in order to avoid foreclosure. The U.S. Treasury conducted these incentives to protect the Housing industry.
During a short sale, the lender will give the homeowner permission to sell the property for less than the amount owed on the mortgage loans. In order to qualify, the lender will ask you to provide proof of your hardship and make up what is called a short sale package. The HAFA short sale will allow homeowners to be free of all debt on the first lien mortgage, while also becoming eligible for $3,000 Cash Back to help with relocation expenses.
Short sales are becoming increasingly popular because of its ability to help a homeowner overcome their financial difficulty, in their home at least. Choosing a short sale versus a foreclosure is typically the most reasonable path to a fulfilling future. When it comes to short sales, the homeowner must be aware that there is a difference between a traditional short sale and the HAFA short sale program.
Qualifications:
HAFA Short Sale Program-
●Primary residence
●Have a loan balance under $729,750
●Monthly mortgage payments must be greater than 31% of monthly income
●First mortgage originated before 01/01/2009
Traditional Short Sale- (2 basic qualifications)
●Financial hardship (often varies from lender to lender)
●Proof of lack of funds / Insolvency
Of course, to qualify for any short sale, a borrower must owe more than the value of their property or be in a position where they do not have needed capital to bring to closing.
Traditional Short Sale VS the HAFA short sale program
●A traditional short sale starts after the property is listed and an offer is given. The HAFA short sale typically starts before the property is listed.
●In a traditional short sale the offer begins the short sale process and all documents that were asked to be provided by the lender must be completed, once all of the proper paperwork in turned into the lender, reviewing and a decision will follow. The HAFA short sale program works like the traditional short sale when it comes to a timeline on when to expect a decision, however with the HAFA short sale, if an offer is put on the property, you will typically receive a decision within 10 days.
●In a traditional short sale the investor may demand cash or a promissory note; they may also maintain the right to pursue a deficiency judgment. In the HAFA short sale, the homeowner can be reassured that they will not be asked to produce a promissory note, cash and their lender will not pursue the homeowner for a deficiency judgment.
Credit Impact-
There is no difference between the HAFA short sale and the traditional short sale when it comes to a homeowner’s credit; however it is less than a foreclosure.
HAFA Short Sale Incentives
●Borrowers will receive $3,000 at the end of the short sale to help with relocation expenses.
●Servicers will receive $1,500 after a successful short sale.
●Investors will receive a max of $2,000 for overheads to second position lean holders. Investors will also receive $1 for every $3 spent to release junior liens up to 6% with a maximum of $6,000.
It is very important to keep in mind that the short sale must be measured in “arms length”, which means the borrower may not sell the property to a relative or anyone else they are close too. The Short Sale Specialist Network is greatly familiar with a HAFA short sale versus the traditional short sale because of their knowledge, experience, and skill in short sales. It takes true experience in order to successfully complete a traditional short sale or the HAFA short sale.
