Update to HAFA Short Sale Program in 2013

The "Home Affordable Foreclosure Alternative" (HAFA) program is a program for distressed homeowners to sell their homes and avoid foreclosure.

This program applies only to participating lenders who agreed to participate in the government's "Home Affordable Modification Program" (HAMP). There are currently about 100 participating lenders, including Chase, Wells Fargo, Bank of America. On February 1, certain rules were changed for these lenders (who are not Freddie Mac, Fannie Mae, or FHA/VA lenders, which are excluded from this post), which simplified some of the steps.

One change now in effect is that the property is no longer required to be owner-occupied, in fact, it may be vacant or tenant-occupied, to be eligible for a HAFA short sale, and the tenant/borrower/non-borrower occupant may qualify for the $3,000 in relocation assistance. Payment to subordinate mortgage lienholders (do you have a 2nd mortgage?) has been increased to a maximum of $8500.

Borrowers are no longer required to successfully complete an initial trial loan period or be eligible for a HAMP loan modification in order to be eligible, and the borrower may apply directly for the HAFA program.

The hardship must be verified by the borrower's lender, with no convictions relating to mortgage fraud or real estate transaction within the past 10 years. A hardship means the borrower must show, among other things, they no longer have sufficient assets to make the mortgage payment (these are  not supposed to include retirement funds).

The current program cutoff date is December 31, 2013 for submission of request for a short sale, or request for approval of an executed sales contract, with conclusion of the transaction by September 30, 2014.

There are specific procedures and forms the borrower must cooperative with during the approval process, which includes about 12 steps including all borrower document submission and lender deadlines. Additional information may be requested depending on the particular loan investor on the borrower's loan.

For a more complete fact sheet on a HAFA short sale, please contact me and I will be happy to e-mail the information, plus links to informational sites.

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