Stop Foreclosure with a Short Sale – New HAFA Changes
There were some important changes that took effect on February 1, 2011 in the government’s Home Affordable Foreclosure Alternative (HAFA) Short Sale program. The short sale program set up by the Treasury Department has been revamped the program has easing income restrictions and the documentation requirements for homeowners facing foreclosure. The reason for the changes are to help streamline the HAFA short sale process and make the program more accessible to more homeowners in the US. The first eight months of the program has only processed 661 short sales.
The government finally got it and has made a significant change and eliminated the requirement and that requirement is that the homeowner’s monthly mortgage payment exceeds a 31% of the homeonwers gross monthly income. With this significant change it will allow many more homeowners to qualify for the HAFA short sale program and broaden it’s reach.
Another gotcha that the governement figured out and has changed is that it will allow more people to apply for HAFA. There was a previous requirement that would disqualify a homeowner and that is a homeowner could not sign a contract and vacate their property within the last 90 days. The change is that a homeowner could have moved out of their with 12 months. It is important to note that the property had to be the sellers principal residence prior to relocation.
There was also another change that pertains to secondary mortgages. Prior to the change, the investor on the second-mortgage was required to accept 6% of their unpaid balance, up to a $ 6,000 cap. With the new change, the $6,000 max for second mortgages remains in place, although the 6% rule has been taken out of the program.
A change that I find hard to belive but if it works out the HAFA process will require lenders to provide borrowers with a short sale agreement within 30 days.
Once accepted in the HAFA Short Sale program the sellers are entitled to a $3,000 relocation fee when a short sale is completed.
Lenders have the option to pay the seller a relocation fee on a successful surrender of title or when the seller vacates the property at a future date, according to a TARP Inspector General report.