Short Sales Get Easier With HAFA

If you need to sell your home to avoid foreclosure, the federal government has introduced the Home Affordable Foreclosure Alternatives (HAFA) program that will make the process much easier for you. Many mortgage servicers have joined forces with the federal government to offer their customers the opportunity to participate in the new HAFA short sale option.

Short Sale – A “short sale” is a process designed to help homeowners who are unable to afford their homes and want to sell their home to avoid foreclosure, even when they may owe more than the home is worth. A short sale is complex process that requires the cooperation and understanding by all involved. The HAFA program provides the buyer, seller, real estate broker and lender the framework and guidelines that allow the short sale to go much smoother.

How Does a HAFA Short Sale Work?

• Pre-Sale: A listing price and/or a minimum net proceeds (the minimum amount your lender will except at closing) required by the lender are established up front.
• Purchase Offer: When you receive an offer on your home it will be approved as long as the offer meets the pre-sale requirements.
• Closing: Once the sale of your home closes, you will be released from all responsibilities for repaying your mortgage. Plus, you will receive $3,000 in moving expense, paid at closing.

Who Is Eligible To Participate In The HAFA Program?
Most homeowners facing financial hardship are eligible. However, loans owned or guaranteed through Fannie Mae or Freddie Mac do not qualify (to see if your loan is a Fannie Mae or Freedie Mac loan, click here). Servicers must consider possible HAMP eligible borrowers for HAFA within 30 calendar days if the borrower has one or more of the following criteria:

• Does not qualify for a HAMP Trial Period Plan
• Does not successfully complete a HAMP Trial Period Plan
• Is delinquent on a HAMP modification by missing at least two consecutive payments
• Requests a short sale or deed-in-lieu

For a loan to qualify for HAFA, it must meet the following criteria:

• The property is the borrower’s principal residence
• The mortgage loan is a first lien mortgage originated on or before January 1, 2009
• The mortgage is delinquent or default is reasonably foreseeable
• The current unpaid principal balance is equal to or less than $729,750
• The borrower’s total monthly mortgage payment exceeds 31 percent of the borrower’s gross income
• The mortgage is not owned or guaranteed by Fannie Mae or Freddie Mac

Who is Supporting HAFA?

Bank of America

• Bank of America announced in March its commitment to participate in HAFA when it activates. It has been preparing for a more streamlined process for months though its support of HAMP.
• Bank of America’s short sale processor Equator has announced the launch of a brand-new best practices software workflow solutions directly related to HAFA10.

Citibank

• Citibank is participating in HAMP which is a requirement for participating in HAFA

GMAC Financial Services

• GMAC has started a program to preemptively contact borrowers who are not eligible for loan modifications under HAMP and offering discussing alternatives through HAFA and claims a three-day turnaround on short sale applications12

Lenders Asset Management Corporation (LAMCO)

• LAMCO has been training teams of specialists to support mortgage servicers comply with HAFA and quickly negotiate short sales11

Wachovia

• Wachovia is participating in HAMP which is a requirement for participating in HAFA

Wells Fargo

• Wells Fargo is participating in HAMP which is a requirement for participating in HAFA
• Wells Fargo has been ramping up efforts to assist homeowners by actively contacting those who are facing hardships

NATIONAL PARTICIPATING SERVICERS
The HAFA Program will not be activated until 4/5/2010, so at this time there is not yet an official list of participating lenders. Most of the lenders who are participating in HAMP will probably participate in the HAFA program. For a full list of servicers participating in HAMP, visit Making Home Affordable’s Participating Servicers List.

If you’re a homeowner looking for answers, or would like to see if you qualify for HAFA, please contact us.

Tagged as: hafa, short sales