HAFA Short Sale Cavalry Arrives!
Posted by Randy Chavers on Fri, Apr 23, 2010 @ 10:53 AM
It's Scary On The Prairie
According to the latest reports, 1 homeowner out of 7 is behind on their mortgage payment. The Great Recession combined with payment increases as mortgages reset has made it impossible for many to afford living in their current home.
Negotiating a Short Sale or signing over the Deed In Lieu (DIL) of Foreclosure have been options for many, but stories describing endless delays, lack of standard procedures and surprise promissory notes for deficiencies have terrified many into just leaving the keys on the counter and walking away.
"Do I hear bugles?"
To the relief of all those homeowners surrounded by hostile mortgage processors, the U.S. Treasury is coming over the hill with a new program. Launched on April 5th, the Home Affordable Foreclosure Alternative (HAFA) establishes streamlined short sale rules and incentivizes borrowers and lenders to work together to avoid foreclosure. HAFA financial incentives include $1,000 to loan servicers to cover administrative fees, up to $1,000 for mortgage investors who agree to share short sale proceeds with second lien holders and $3,000 to the homeowners for relocation. Also, under HAFA ,there is no over-hanging liability (contingent) to the bank, that is, the homeowner will not be required to sign a promissory note for the shortfall of the mortgage balance.
Time is of the Essence
Perhaps the best thing about HAFA is the requirement that participating lenders provide the sale price they are willing to accept before the home is put on the market. Doing the work on the front end should move things along much faster than before.
The Bad News; It's Complicated.
The good people at the U.S. Treasury have a variety of requirements, rules and regulations that must be followed during the process. It may be well-advised to consider working with a real estate professional who has completed a certification course in distressed properties, such as the CDPE (Certified Distressed Property Expert). To receive an email with a list of CDPE graduates, send us an email at customerservice@realestateofatlanta.com with "CPDE List" in the subject line.