Info About HAFA Short Sales http://infoabouthafashortsales.com HAFA Short Sales Info for Home Sellers from California Short Sale Lawyer Ronald Ballard Fri, 28 May 2010 23:27:41 +0000 http://wordpress.org/?v=2.9.2 en hourly 1 HAFA Basics http://infoabouthafashortsales.com/2010/04/hafa-basics/ http://infoabouthafashortsales.com/2010/04/hafa-basics/#comments Thu, 08 Apr 2010 08:22:21 +0000 Ron Ballard http://infoabouthafashortsales.com/?p=1 On April 4, 2010 the United States federal government began implementation of the “Home Affordable Foreclosure Alternatives” (HAFA) program. This was promoted by the Obama Administration as a way to encourage short sales. In reality, it will not be effective and it’s usually worse for a homeowner who is facing a signficant hardship when compared to a traditional short sale. As one sees below, it is more beneficial for the bank than for the homeowner. A few key reasons are:

  1. Homeowners who likely were not making payments due to hardship must pay 31% of their gross income to participate in the program or agree to give their property to the bank by a ”deed in lieu” of foreclosure.
  2. The bank determines the sales price. Neither the homeowner nor their broker have any control or influence over pricing.
  3. The bank can force a deed in lieu if the property does not sell at IT’s price in 120 days, even if the property is not in foreclosure.
  4. Even if the program was good, it covers very few loans: not Fannie Mae, Freddie Mac, FHA and VA loans.
  5. It only affect a first mortgage/deed of trust. The homeowner is responsible for negotiation of their own junior liens (if any). The program allows up to 6% of each lien balance to be paid, with a maximum payment of $6,000 for ALL liens.

The homeowners’ benefit is a $3,000 incentive payment IF the sale closes. This presumably helps with moving costs.

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