(HAFA and Short Sales) On April 5, 2010, the next addition of the government’s HAMP program (Home Affordable Modification Program) goes into effect. HAFA (Home Affordable Foreclosure Alternatives) is intended to bring some guidelines and order to the existing chaos and uncertainty of the short sale landscape. Although not required to be followed, if a lender elects to participate in HAMP, it has to offer HAFA to any homeowner who does not qualify or fails in a HAMP modification.
HAFA provides certain incentives to both the homeowner ($1,500.00 move-out allowance) and the lender ($1,000.00 for allowing $3,000.00 of the sales proceeds to be paid to the second). Another benefit to the homeowner is that the deficiency on the first and maybe the second has to be forgiven. Benefits for the realtor include that a full commission is allowed and the process is supposed to be streamlined. There is even a provision whereby the seller can request pre-approval of a property price for a short sale (ARASS).
As the program is still being developed, there will be a significant learning curve, but hopefully HAFA will be more successful than the HAMP program. If you have a short sale that will occur after April 5th, 2010, contact the lender about whether HAFA is applicable or call your attorney for more details. (I will continue to monitor and report on the implementation of HAFA as it could provide a significant improvement for future short sales.)
Please contact me if you have any questions.