Frequently Asked Questions
The one reality about today’s housing market is that many people have more questions than answers. The following information is intended to help you or someone you know better understand your situation.
Do I qualify for a short sale?
The qualifications for a short sale include any or all of the following:
- Financial Hardship – There is a situation causing you to have trouble affording your mortgage.
- Monthly Income Shortfall – A lender will want to see that you cannot afford, or soon will not be able to afford your mortgage.
- Insolvency – The lender will want to see that you do not have significant liquid assets that would allow you to pay down your mortgage.
What is HAFA?
HAFA is a government program that provides financial incentives to Borrowers, servicers and investors who utilize a foreclosure alternative (short sale or deed-in-lieu) instead of a foreclosure sale to transfer ownership.
Benefits of HAFA
Ultimately, foreclosure alternatives such as those mentioned above reduce the need for expensive foreclosure proceedings for the investor and the potential harmful effects a foreclosure would have on the Borrower. The pre-foreclosure options typically help maintain the condition of the property and therefore, the preservation/value of the property by minimizing the time a property could potentially be vacant and subject to vandalism and deterioration through lack of maintenance. Finally, the pre-foreclosure options generally provide a substantially better outcome for investors and communities through lower loss severities for investors and fewer vacant properties for communities.
Details of HAFA
HAFA was introduced to simplify and streamline the short sale process. HAFA accomplishes this in the following ways:
- Compliments HAMP by providing viable alternatives for borrowers who are HAMP-eligible
- Uses standard processes, documents and timeframes
- Provides financial incentives to borrowers, servicers and investors
- Requires that borrowers be fully released from future liability for the debt
- Allows the borrower to receive pre-approved short sale terms prior to the property listing
HAFA provides financial incentive as follows:
- Homeowners and current tenants qualify for $3,000 in Relocation Assistance after a short sale or deed-in-lieu has been completed
- Financial incentives for servicers participating in the program include up to $1,500 servicing bonus, upon completion of a short sale or deed-in-lieu
- Financial incentives for investors up to a total of $8,500 in short sale proceeds to be distributed to subordinate lien holders.
- Lenders pay all servicing fees – homeowners have no out-of-pocket expenses
Eligibility Criteria for $3,000 relocation cost (HAFA)
Basic eligibility criteria are as follows:
- The mortgage loan is a first lien mortgage originated on or before January 1, 2009
- The mortgage is delinquent or default is reasonably foreseeable
- The current unpaid principal balance is equal to or less than $625,500 (for one to four unit property)
- The borrower’s total monthly mortgage payment exceeds 31% of the borrower’s gross income. The monthly mortgage payment criteria includes principal, interest, property taxes, hazard insurance, flood insurance (if applicable), association fees (if applicable), as well as any escrow payment shortage amounts subject to a pre-payment plan.