The new government standardized short-sale plan could help troubled homeowners

Help ButtonThe U.S. Dept. of the Treasury recently announced the Home Affordable Foreclosure Alternatives Program (HAFA), which provides instructions for lenders and servicers participating in the Making Home Affordable Program and Home Affordable Modification Program (HAMP).  The purpose of HAFA is to create an alternative to foreclosures for homeowners unable to successfully modify their troubled mortgage under HAMP, and to streamline the short-sale process.

MAKING SENSE OF THE STORY:

  • A short sale is when the lender agrees to accept less than the amount owed on the mortgage instead of foreclosing.  Many homeowners and REALTORS® have expressed their frustrations in the short-sale process, criticizing lenders for the amount of time it takes to process and approve a short sale.  The CALIFORNIA ASSOCIATION OF REALTORS® listened to members’ concerns, worked with other industry groups, and responded by helping to create provisions to streamline the short-sale process.
  • The HAFA program simplifies and encourages short sales and deeds in lieu of foreclosure.  It will permit pre-approved short sale terms before a property is listed; release borrowers from future liability for the debt; and provide financial incentives to borrowers, servicers, and investors.
  •  Under terms of the program, the borrower and/or listing broker have three business days to submit an executed purchase offer and related documents to the servicer on a short sale, and the servicer has 10 business days to respond to an executed purchase offer.
  • The servicer also will determine the minimum net proceeds for a short sale.  If an offer presented to the servicer by the borrower or listing broker meets the net proceeds requirement, then the servicer must accept it.

The program currently is available only for non-Fannie Mae- or Freddie Mac-owned loans up to $729,750 and is scheduled to take effect April 5, 2010.  However, the California Association of Realtors expects that many lenders will choose to implement it before the deadline.

 What this means is that sellers will have less scary ‘unknowns’ during the short sale process and no future liability.  It will also give buyers more hope that their short sale purchase transactions will go more smoothly and they will be in their home sooner.

If you, like so many others have experienced a hardship this year and need to sell your home, please give me a call at (949) 583-1331.  I have a system that takes some of  the pain out of short sales whether you are occupying it or if it is a rental.

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