Home > Corona, Foreclosure, Home Prices, Inland Empire, Loan Modification, Moreno Valley, Murrieta, Real Estate, Riverside, Short Sales, Temecula > Is a HAFA Short Sale Right for you? New Rules Make Qualifying Easier

Is a HAFA Short Sale Right for you? New Rules Make Qualifying Easier

THE FOLLOWING ARTICLE APPEARED IN THE JAN. 15, 2011, RIVERSIDE PRESS-ENTERPRISE

After months of criticism that government had created another ineffective program, the Treasury Department has eased the guidelines of the Home Affordable Foreclosure Alternatives program.

Though the rule changes don’t fully address compensation for second lien holders, they do relieve the restrictions on relocation for jobs and distance.

The HAFA program was created by the Obama Administration in 2009 as an alternative for homeowners who could not qualify for a loan modification. Officials expected more than 1 million people to take advantage of the government-subsidized program that provided, among other things, $3,000 relocation assistance to the homeowner.

But as of Sept. 30, 2010, in the first six months of the program, only 342 HAFA program short sales were consummated. The biggest challenge to the program: limits on compensation paid to second lien holders, which are prevalent in California, Nevada, Florida and Arizona, states with the highest concentration of distressed homeowners.

Last week, the Treasury Department announced new standards for the HAFA program, to take effect Feb. 1. However, the changes do not fully address the most common obstacle that applicants face – acceptance by the second lien holder.

The program changes include:

  • One of the biggest changes is that the borrower can now qualify even if the property is currently rented to a tenant, as long as the borrower lived in the property as a principal residence within the 12 months prior to applying for the HAFA program. Additionally, the relocation does not have to be job-related, and the distance requirement for relocation has been removed.
  • The servicer is no longer required to verify the financial information of the homeowner, though the servicer still can require the borrower to provide updated paystubs, bank statements and tax returns. And a hardship affidavit is still required. That makes this change effectively toothless, since banks routinely require these documents before they’ll even open a loan mod or short sale file.
  • The servicer is no longer required to determine if the homeowner’s current mortgage payment exceeds 31 percent of their gross income. However, since the servicer still is allowed to ask for updated paystubs, it already has the ability to make that determination
  • Servicers are no longer capped at 6 percent to compensate subordinate lien holders. However, the $6,000 cap is still in force, which makes this change ineffectual and will continue to make HAFA program short sales difficult in California, where many distressed homeowners have more than one loan and the loan amounts are higher. (Anecdotally, most successful HAFA short sales have occurred when the borrower had only one loan or two loans from one bank.)
  • The servicer must provide HAFA short sale paperwork within 30 days after the homeowner applies for the program. And it must respond with an approval, decline or counter-offer within 30 days after receiving the file.
  • HAFA applicants already in process before Feb. 1 are not covered by the new rule changes, though the servicer can re-evaluate them at their own discretion.

Homeowners interested in the HAFA program must tread carefully. There are several alternative contracts and methods to pursue HAFA. One method requires the homeowner to surrender the property as a deed-in-lieu of foreclosure, which has essentially the same impact as a foreclosure on a person’s credit report and future ability to purchase a home.

It’s critical that a homeowner choose the proper method. Waiting for the bank to take control and set the price is a recipe for failure. To determine if the HAFA Program is the appropriate solution for you, contact us immediately for a free HAFA evaluation. There’s no obligation.

Or, for a free copy of the Brand-New Special Report, “9 Alternatives to Inland Empire Foreclosure,” call 1-800-941-1900, ext. 9003; or email PE@DreamBigRealEstate.com

(Brian Bean and Timothy Hardin are Realtors and Ambassadors for Helping A Million Homeowners, a nationwide organization that is committed to helping alleviate the financial stress that so many homeowners face today. They can be reached directly at Brian@DreamBigRealEstate.com.)

Brian Bean and Timothy Hardin
Real Estate Professionals
www.DreamBigRealEstate.com
www.IEShortSalePros.com
www.HelpingAMillionHomeowners.com

Short Sale Genius Elite

I’ve been specially trained to negotiate short sales with an emphasis on Deficiency Waivers

 

ACTIVE RAIN - Dream Big Real Estate and Inland Empire Short Sale Pros Blog Dream Big Real Estate and Inland Empire Short Sale Pros Blog FACEBOOK - Dream Big Real Estate and Inland Empire Short Sale Pros TWITTER - Dream Big Real Estate and Inland Empire Short Sale ProsLINKEDIN - Dream Big Real Estate and Inland Empire Short Sale ProsRSS FEED - Dream Big Real Estate and Inland Empire Short Sale Pros BlogSTUMBLE UPON - Dream Big Real Estate and Inland Empire Short Sale Pros SEND EMAIL to BRIAN BEAN @ Dream Big Real Estate and Inland Empire Short Sale Pros YAHOO PULSE - Dream Big Real Estate and Inland Empire Short Sale Pros GOOGLE BUZZ - Dream Big Real Estate and Inland Empire Short Sale ProsDIGG - Dream Big Real Estate and Inland Empire Short Sale Pros

If one advances confidently in the direction of his dreams,
and endeavors to live the life which he has imagined,
he will meet with a success unexpected in common hours.

Henry David Thoreau

Advertisements
  1. January 17, 2011 at 9:48 am

    Great article. So glad you are so committed to helping one million homeowners get out from under their upside down home when it makes sense for them. I’m going to share this info with my SOI.

  2. September 5, 2013 at 1:13 pm

    Though the rule changes don’t fully address compensation for second lien holders, they do relieve the restrictions on relocation for jobs and distance.

  1. No trackbacks yet.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: