Seriously though, the government has again ramped up their efforts to help the millions of Americans who are upside down in their mortgage and need to sell for reasons of financial hardship. Yet another acronym lurks…HAFA which stands for Home Affordable Foreclosure Alternatives Program goes into effect April 5, 2010. HAFA is designed to simplify and streamline the short sale process/transaction. While there are 43 pages of guidelines to review, below are some of the changes that are key to helping streamline the current process of completing a short sale.
- The banks will now tell the borrower (or borrower’s real estate agent) the net figure required to complete the sale prior to the borrower listing the home. This is huge, since in the past in most cases borrowers had no idea what amount the bank would accept and the home sat on the market because it was overpriced or the bank took more than a month to respond.
- The new laws requires banks to fully release borrowers from future liability for the first mortgage debt. No cash contribution, promissory note, or deficiency judgment is allowed.
- New forms were created to standardize the process. With the new forms comes standardization of responses times for each step in the process.
- HUD now provides financial incentives to get the short sale completed – $1,500 for borrower as “relocation assistance”, $1,000 for servicers to cover administrative and processing costs, and up to $1,000 for investors.
Oh, and a nice bonus included in this program is that banks can’t ask the real estate brokers to cut their commission anymore. That is if the broker is charging 6% or less on the listing agreement. And ya know, 3% is fair compensation to an agent having to guide a buyer or a seller through the short sale process.
Officially, the program does not take effect until April 5, 2010. However, banks can start offering this earlier if they meet requirements. In fact, I’m certain that they are already using the new process because we have more than one client in this situation. You can learn more about the government programs at MakingHomeAffordable.gov.