Have you heard of the November 30, 2009, program by the Treasury Department called HAFA? It took effect this week on Monday, April 5, and its guidelines follow below. HAFA (Home Affordable Foreclosure Alternatives Program) is part of the fairly unsuccessful -- well, VERY unsuccessful -- HAMP program, Home Affordable Modification Program under which almost no one has been able to modify their mortgages. I think the odds are slightly better than being taken out for dinner by Richard Gere -- but only slightly. Get the picture?
HAFA provides incentives in connection with a short sale or deed in lieu of foreclosure used to avoid foreclosure on a loan eligible for modificaiton under the HAMP program. The catch? Not all servicers participate in this program. And the catch for HAFA? Two main investors do NOT participate at this time, namely FannieMae and FreddieMac. HUGE problem since they are THE major real estate investors in the United States. Supposedly Fannie and Freddie will issue their own versions of HAFA in coming weeks. We'll see on that.
There are 43 pages of guidelines in HAFA, designed to simplify and streamline the use of short sales and deeds in lieu of foreclosure. HAFA:
Complements HAMP by providing a viable alternative for borrowers who are HAMP eligible but are unable to keep their home;
Uses borrower financial and hardship information already collected in connection with consideration of a loan modification (Oh, sure -- you mean one department of the lender will be talking to another department? I will believe that when I see it.)
Allows borrowers to receive pre-approved short sales terms before listing the property. Currently after many months of painful and frustrating negotiations by the sellers' broker and the bank and many lost documents and unsatisfying phone calls the bank may or may not send a letter approving the short sale, and the terms are always a guessing game.
Prohibits the servicers from requiring a reduction in the real estate commission agreed upon in the listing agreement. Are you listening, Chase?
Requires borrowers to be fully released from future liability for the first mortgage debt. THIS IS HUGE, HUGE, HUGE, HUGE!!! DID I SAY HUGE?
Uses standard processes, documents and timeframes/deadlines. Currently every lender and sometimes even different employees for the same lenders use varying forms and processes and timelines. Some can be as long as a year.
Provides financial incentives for borrower relocation assistance, for servicers to cover some of their costs and for investors for allowing a atotal of up to $3,000 in short sale proceeds to be distributed to subordinate lien holders.
Requires all servicers participating in HAMP to implement HAFA in accordance with their own written policy, consistent with investor guidelines.
See MakingHomeAffordable.gov for participating servicers.
And good luck! Call me or email me with success stories, frustrations, questions or just to gripe! There are great deals in Central Oregon real estate, and maybe this program will unlock the door to the greatest deals of all, short sales. Ready, set, go!