Obama Administration Improves The HAFA Program
The Obama Administration recently announced significant updates to the Home Affordable Foreclosure Alternatives program which was created in 2009 by the government to provide financial incentives for servicers and borrowers when in pursuit of a short sale or a DIL (deed in lieu) of foreclosure. These updates will provide more assistance to homeowners and will be in effect June 1, 2012.
For more information on HAFA, please read my previous post: HAFA Possible or Impossible.
According to the Making Home Affordable report from Treasury.gov, there have been 30,538 completed HAFA short sales and 843 Deed-in-Lieu transactions. Although this is under par from what we hoped it would bring, as stated before in my previous HAFA post, more modifications to the program make the option seem more viable. Fortunately, the recent changes address key issues, mainly, the compensation to the 2nd lienholders. Here are the new changes for the Home Affordable Foreclosures Alternative: *Info from ShortSaleGuide
- The deadline for HAFA has been extended. A borrower now has until December 31, 2013 to submit a Short Sale Agreement or a written request for a consideration for a Short Sale Agreement to be eligible for HAFA.
- There are no longer any occupancy requirements for HAFA eligibility. (Before the update the property had to be occupied as the borrower’s primary residence at some point within the prior 12 months).
- 2nd liens can now get up to $8,500. (It was $6,000).
- Servicers can now accept a full payment, if the borrower requests to make a full contractual payment in order to stay current on the loan.
*A caveat for those whose loans are owned or guaranteed by Fannie Mae or Freddie Mac is that this supplemental directive does not apply.
One point to note is, the homeowner may stay current on the loan while executing a short sale thus allowing the homeowner’s credit to have minimal damages after closing the sale. This will benefit the homeowner’s chances of acquiring another loan for their next home purchase.
For those who qualify, the HAFA program is an excellent program as it leaves homeowner’s with no possibility of a deficiency judgment and/or promissory note. The government also gives $3000 of relocation assistance once the short sale has closed. With these new improvements from the Obama administration, the HAFA program may be advantageous to those who qualify for the program. If you would like more information on HAFA short sales or would like to speak with our local experts, contact us here or feel free to email me at Peter@seattleshortsaleblog.com with additional questions.
Hope this helps