As of today, the short sale process is streamlined. However, it remains to be seen how seamless the changeover will be for lenders.
The Home Affordable Foreclosure Alternatives (HAFA) program provides the following incentives.
- $3,000 to borrowers for relocation assistance
- $1,500 to servicers for administrative and processing costs
- Up to $2,000 to investors who allow up to $6,000 in short sale proceeds to be distributed to subordinate lien holders
HAFA also provides a big protection for participating sellers: “Requires borrowers to be fully released from future liability for the first mortgage debt and, if the subordinate lien holders receives an incentive under HAFA, those debt as well (no cash contribution, promissory note, or deficiency judgment is allowed).”
The National Association of Realtors reports that borrowers will have to meet certain criteria to qualify for this program.
- “Principal residence. The property may be vacant up to 90 days before the date of the Short Sale Agreement (SAA), Alternative Request for Approval of Short Sale, or DIL (deed in lieu of foreclosure) but only if the borrower documents they were required to relocate at least 100 miles from their home for purposes of employment and they have not purchased another property in the 90 day period.”
- “First lien originated before 2009″
- “Mortgage delinquent or default is reasonably foreseeable”
- “Unpaid principal balance no more than $729,750 (higher limits for two- to four-unit dwellings)”
- “Borrower’s total monthly payment exceeds 31% of gross income”
HAFA’s goal is to prevent underwater properties from going into foreclosure.
The National Association of Realtors (NAR) produced the following materials for consumers.
The US Treasury Department also released its own guidelines for the program.
DHW asks: Do you think HAFA will successfully streamline the short sale process?