Discover 7 Benefits of HAFA Short Sale for Homeowners
Exciting News for Homeowners! This new law is going to be effective as of April 5, 2010, it is called HAFA – Home Affordable Foreclosure Alternative, which will help homeowners who are having difficulty in paying the mortgage and cannot afford the loan modification program under the Home Affordable Modification Program (HAMP). This new guidance is supplemental of HAMP, which gives guidance to servicers to work on short sale or deed-in-lieu to avoid foreclosure on an eligible loan under this program.
This new program is beneficial for everyone – borrower, servicer and investors by providing foreclosure alternatives and incentives for participating in this program. Currently, this program is available for loans which are not owned or guaranteed by Fannie Mae or Freddie Mac.
Borrowers that meet the eligibility criteria for HAMP but cannot afford the modified payments, or do not successfully complete a Trial Period Plan, or default on a HAMP modification (missed at least two consecutive payments) or request a short sale will be eligible for HAFA program. The short sale must be arm’s length transaction
Let me tell you some of the benefits for homeowners of doing short sale under this program:
- The servicer may not require a cash contribution or promissory note from the borrower
- The servicer will approve the list price even before listing the house if you are qualified for HAMP but cannot afford it
- Servicer must forfeit the ability to pursue a deficiency judgment against the borrower. This is one of the biggest benefits for homeowners who are doing short sale under this program, so after the sale, they don’t have to worry about any deficiency judgment after selling the house
- The servicer will pay the allowable closing costs for the seller to close the transaction
- The servicer may pay the subordinate liens not more than 6% of the unpaid principle balance of their loan to release the lien and full release of borrower liability (No more fear of deficiency judgment from the second lien holder!)
- Borrowers will get $3,000 as relocation expense at close of escrow.
- The servicer will pay the realtor’s commission, so no out of pocket expenses from the seller
Short sale is a complex transactions involving coordination and cooperation amount all parties involved in this transaction, so work with an experienced short sale real estate agent who have experienced in closing short sales, not all agents are experienced in short sale.
There are certain guidelines and time period, which you have to follow in order to complete the short sale successfully, so check the agent’s experience in short sale before selecting as your agent for assisting in your short sale.
If you have any questions on HAFA short sale or would like to see whether you qualify for the HAFA program, please call me at (910) 622-0319, I would be happy to assist you. If you are in bay area and would like to meet with me personally for a free confidential consultation then also give me a call. www.shortsalewilmintonnc.com
Posted by NIlesh Jethwa Wilmington NC Short Sale Expert