Updates on the HAFA Program

Bank short sale transactions have been quite helpful the last few years. In fact, since the government’s HAFA program has been enacted, the program has helped many Simi Valley homeowners, who are upside down on their mortgages obtain short sale approval from their lenders. In order to participate in the program, both the lender and the borrower must agree to the terms. The borrower’s mortgage balance must not exceed $729,750, with slightly higher limits for 2-4 unit properties.

 

The property must be the borrower’s primary residence or the borrower must show that they resided at the property if the property is currently vacant or has been rented within the last 12 months. The borrower must have been turned down for a mortgage modification under the government’s HAMP program, or qualified for the HAMP program, but unable to make two or more of the trial payments. The loan servicer is no longer required to verify the borrower’s financials or determine that the borrower’s mortgage payment exceeds 31% of the borrower’s gross income. The borrower does have to sign a Hardship Affidavit. Some loan servicers may still require that the borrower provide them with updated financial information though. 

 

The Program allows borrowers to receive pre-approved short sales terms prior to listing their home with a local Simi Valley Realtor including the listing price and net proceeds. This is helpful to you, your listing agent and the buyer as well because it take the guess work out of the equation. You are not allowed to sell your home to any relatives or persons you have personal or business relationships with, and the property may not be reconveyed back to you within 90 days after the closing of the transaction. Realtor’s commissions are also paid up to 6% of the purchase price.  

 

You will need to sign a short sale agreement with your loan servicer.  The agreement allows the servicer to extend it for up to 12 months, and requires that the proceeds from the sale satisfy the borrower’s mortgage debt. The loan servicer must approve or disapprove the sale terms or provide a counter offer within 30 calendar days from receipt of the purchase and sale contract. Loan servicers and investors receive incentives from the government for participation in the short sale process and the borrower gets a relocation fee of $1,500.

 

The HAFA program has helped to speed up the short sale process. The HAFA program ends December 31, 2012.