Short Sale Specialists

How To Qualify With HAFA

If you're worried about foreclosure or behind in your payments, find out if a short sale is right for you.

Do I qualify for a short sale? Contrary to conventional wisdom, it is not difficult to qualify for a short sale.
 If you have no equity in your home, you are a good candidate.
 If you are unable to sell your home to pay off all the outstanding loans and debt secured by the property, you are a good candidate.
 If you owe more than the home is currently worth, you are a good candidate.
  And, if you want or need to sell but can't or won't bring cash to closing to payoff the mortgage, then you are a good candidate.


HAFA Short Sale Help
If you can't find a way to keep your home -- such as by a loan modification through the government's Home Affordable Modification Program (HAMP) -- then it's time to contact us or your lender or loan servicer about conducting a short sale. Your lender can tell you whether you qualify for another recently launched government program -- the Home Affordable Foreclosure Alternatives program (HAFA).

Although you can conduct a short sale outside of the program, HAFA streamlines the short-sale process for qualified sellers and their participating lenders. Here's what you need to know.

What HAFA Is
On November 30, 2009, the U.S. Treasury Department announced HAFA as part of HAMP, a program designed to help homeowners at risk of foreclosure keep their homes by restructuring their mortgages to be more affordable.

HAFA aims to help homeowners:

• who otherwise qualified for but could not be approved for HAMP mortgage modification or
  
• who were offered a HAMP modification and rejected it or
  
• who were unable to make their mortgage payments after a HAMP modification.

Effective April 5, 2010 through December 31, 2012, HAFA is designed to reduce lengthy and expensive foreclosure proceedings by streamlining the short-sale process for qualified sellers, their lenders/loan servicers, real estate brokers and short-sale buyers. The program offers monetary incentives to encourage various parties to participate in the program and adhere to its requirements, timeframes and deadlines.

HAFA also applies to situations in which the lender/loan servicer is willing to accept a deed-in-lieu of foreclosure (DIL) as full satisfaction of the total amount due on the first mortgage. (Many lenders/loan servicers, however, require homeowners to make a good-faith effort to conduct a short sale before they are willing to approve a DIL request.)

How HAFA Works
The HAFA program simplifies and streamlines the use of short sales and DIL options by incorporating the following features:

• Complements HAMP by providing viable alternatives for homeowners who are HAMP eligible.
  
• Utilizes the homeowner's financial and hardship information collected in conjunction with HAMP, eliminating the need for additional eligibility analysis.
  
• Allows the homeowner to receive pre-approved short-sale terms - including minimum acceptable net proceeds from the sale -- before listing the property for sale. (In traditional short sales, a homeowner/seller must usually list the property and sign a contract with a buyer before requesting the lender/servicer to consider short-sale approval.)
  
• Prohibits the lender/servicer from requiring, as a condition of approving the short sale, a reduction in the real estate commission agreed upon in the listing agreement.
  
• Requires that the homeowner/seller be fully released from future liability for any outstanding first-mortgage debt. In addition, if a subordinate lien holder receives a monetary incentive under HAFA, that debt is released as well. Under HAFA, no cash contribution, promissory note or deficiency judgment is allowed.
  
• Uses standard processes, documents and timeframes/deadlines.
  
• Provides financial incentives to homeowners/sellers, servicers and investors, including $3,000 for seller relocation assistance.

Who Qualifies
You are eligible for HAMP, and therefore HAFA, if all of the following conditions are met:

• The property is your principal residence;
  
• Your mortgage loan is a first lien mortgage originated on or before January 1, 2009;
  
• Your mortgage is delinquent or default is reasonably foreseeable;
  
• Your current unpaid mortgage principal balance is equal to or less than $729,7501 (if a one-unit property; higher amounts apply to two-, three- and four-unit dwellings).
  

More Information
To learn more about the fine points of the HAFA program, review detailed guidelines online at: www.hmpadmin.com/portal/programs/foreclosure_alternatives.html

Again, the first step is to contact your lender/servicer to ask about your eligibility. Once you find out whether you're a candidate for a short sale under HAFA -- or whether you'll need to conduct a short sale without that support -- give us a call. We'll work with all parties involved to help you negotiate the process and, just as important, quickly find a buyer whose offer is likely to satisfy your lender's requirements.

Remember, the goal of a short sale is to sell your home and walk away without owing your lender or other lien holders any further repayment. It's not always possible for every homeowner facing foreclosure, but if it's possible for you, we can help you accomplish that goal.