Friday, June 4, 2010
Home Affordable Foreclosure Alternatives Update
The governments HAFA program has had some last minute changes that makes the program twice as appealing to potential short sellers. The foreclosure alternative program now pays out $3000 to homeowners who sell their house for less than they owe - a short sale and now $6000 to second lien holders. Previously the government paid out only $1500.
Lenders are compelled under the new rules to answer a valid offer within ten days. Before theses rules lenders did not have any time constraints and short sales were anything but short.
Lenders who offer HAMP modifications must offer the HAFA program before they can foreclose. The HAFA rules apply only to loans made prior to 2009. The borrower must be "at-risk", which means that they have a verifiable hardship. The program only applies to conforming loans under $729,250 and their first mortgage payment must be less than 31% of income.
Original Post
Under "The Home Affordable Foreclosure Alternatives Program" the Treasury will be issuing checks to homeowners for $1500 and $1000 to lenders when they execute a short sale agreement. Second lien holders will get up to $3000 to release their interest in a property. The lender must forgive the unpaid balance on the loan.
Under the new guidelines, lenders have only 10 days to approve or disapprove the transaction.
Here is a link to the Government guidance. https://www.hmpadmin.com/portal/docs/hamp_servicer/sd0909.pdf
http://www.reuters.com/article/ousivMolt/idUSTRE5AT5X520091130
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