A short sale is when your mortgage company allows you to pay less than your mortgage balance in order to satisfy your debt and sell your home.

A deed-in-lieu (DIL) is when a home owner grants the property back to the mortgager. HAFA requires a property be marketed for 120 days as a short sale, before a DIL can be negotiated (circumstances may apply) .

Who is eligible for a HAFA short sale?

Servicers can not consider a borrower for HAFA until they have been evaluted for a HAMP modification. However, the borrower who meets eligibilty criteria for HAMP can still chose to say "NO" to a modification and proceed to a HAFA short sale.

Property MUST be owner occupied, within the last 12months! The mortgage loan is the first lien mortgage originated on or before Jan. 1, 2009. The current unpaid mortgage is equal to or less than $729,750 (may vary for 2-4 units). A non-owner occupied property does not qualify under the HAFA program, but  may still qualify for a non-HAFA short sale. Ask me how.

 

Incentive...  borrower recieves $3,000 at close of escrow for relocation assistance. The HAFA program mandates forgiveness of ALL liability for repayment of both the first and second lien holders!

Second lien payoff, caps of at 6% of second lien amount(s) with a cap of $6,000.

HAFA is still subject to investor constraints and must implimentd within the investor guidelines.

Fannie Mae/Freddie Mac Short sale criteria?

Fannie Mae- Very simular to that of non-GSE HAFA above. Difference are to servicer.

Freddie Mac- Very simular to that of non-GSE HAFA above, with the  exception of the following;

Borrower(s) MUST be more than 60 days deliquent and have cash reserves less than the greater of $5,000 or 3x's their current monthly mortgage payment.

 

How long does a  HAFA short sale take?

Remember borrow MUST be considered for HAMP mod first. If HAMP fails, or borrower (seller) choses to request a short sale... there are one of two procedures.

RASS (Request for approval of short sale)- This is a request to the services to short sell the property. Servicer has 30 days to responed with approval of SSA (short sale approval) or deniel of short sale.

If approved (this usually means seriver has set a pre-approved sale price), Borrower has 14 days to respond to servicer.

The duration of the short sale is 120 days, effictive the date the SSA was mailed to borrower.

The SSA and listing agreement with REALTOR must be turned in within 14 days of receiving the SSA from servicer.

Once borrower accepts, and executes an offer. Borrower and their REALTOR have 3 days to submit offer to servicer...along with buyer's pre-approval letter and summary of negotiations with subordinate lien holders (2nd, equity line etc..).

Servicer has 10 days to respond to terms of offer.

Once short sale offer has been approved, closing of escrow is a minumum of 45 day (can be reduced with consent)

 

ARASS (Alternative Request for approval of short sale)- This is a request made to the servicer, when borrower (seller) has an executed offer before the SSA was grated.

Borrower and their REALTOR submit executed offer to servicer. Again servicer must determine if borrower is eligible for HAMP mod, with approval time 14 days. If eligible, servicer must notify borrower of option to request a HAMP mod. Borrower can decline mod, and seek short sale approval.

Because short sale was not previously approved, process for approval time may vary. Servicer must approve proposed short sale if proceeds to servicer equals or exceeds the minimum net determined by the servicer and all other terms have been met.

Once short sale offer has been approved, closing of escrow is a minumum of 45 day (can be reduced with consent)

Differences of  the Fannie Mae & Freddie Mac HAFA short sale?

Vary simular to non-GSE HAFA above, with some key differences.

Fannie Mae- If  foreclosure sale is scheduled within the next 60 days, or proceeding could be initiated and have resonable probablity of resulting in a foreclosure, servicer must NOT consider borrower for HAFA short slae without written consent from servicer.

Borrower may be eligible if they are able to provide evidence of required relocation of at least 100 miles from their mortgaged property in order to accept new employment, or job  transfer within it's own company. Borrower MUST NOT have purchased a 1-4 unit property in the last 90 days prior to date of HAFA short sale agreement (SSA).

The servicer must evaluate the borrowers financial condition by determining if the borrower has the ability to make their mortgage payments, but have chosen not to. Does the borrower have cash reserves equal or exceeding 3x their total monthly mortgage payment (including tax & insurance) or $5,000 whichever is greater, or if the borrower has a high surplus income?

Freddie Mac- Borrower(s) MUST be more than 60 days deliquent and have cash reserves less than the greater of $5,000 or 3x's their current monthly mortgage payment.

The property must be listed for a 90 day "as-is" timeframe at market value using the BPO or appraisal, before any reduction can be made. Freddie does not allow an extension of the SSA beyond the 120 days, without written authorization from Freddie Mac.

Under the Freddie Mac guidelines a Deed-in-lieu  may not be offered unless the borrower has previously marketed the property under the HAFA short sale process.

Upfront knowledge...Freddie Mac allows cap up to 9% to help buyer(s) pay for closing cost, and Real Estate commission.

 

Are there tax consequences?

Debt forgivness under HAFA can have tax and credit rating impact for borrowers. Please seek the advise from a licensed tax consultant.

Remember... The SSA (short sale agreement) will be created and/or amended according to each investors guidelines and requirments . HAFA is fairly new, and therefor guidelines and requirment may change.

How do I get started?

The first step in completing a HAFA short sale is to contact me. Together we can discuss your options, and begin the process with you.

 

The CDPE Difference:

A Certified Distressed Property Expert (CDPE) is a real estate professional with specific understanding of the complex issues confronting the real estate industry, and the foreclosure avoidance options available to homeowners. Through comprehensive training and experience, CDPEs are able to provide solutions for homeowners facing hardships in today’s market, specifically short sales.

The prospect of foreclosure can be financially and emotionally devastating, and often homeowners proceed without guidance of any kind. The developers of the CDPE Designation believe that the best course of action for a homeowner in distress is to speak with a well-informed, licensed real estate professional. They have the tools needed to help homeowners find the best solution for their situation. Often, when other options have been exhausted, CDPEs can help homeowners avoid foreclosure through the efficient execution of a short sale.

While enduring financial difficulties is challenging for any family, the process of finding a qualified real estate professional should not be. Selecting an agent with the CDPE Designation ensures you are dealing with a professional trained to address your specific needs. For more information, contact a CDPE in your area.

CDPEs don’t merely assist in selling properties, they serve and help save their clients in need.