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Tuesday, September 24, 2013

What is a HAFA Short Sale?

     A Home Affordable Foreclosure Alternative popularly known as a HAFA short sale can provide qualified distressed homeowners who are not able to modify their mortgages or file Chapter 13 bankruptcy to save their homes the ability to sell their homes with no deficiency and receive up to $3,000.00 in relocation funds from their lender.
     Some of the main requirements are:  
       The borrower must still occupy the property;
       The mortgage loan cannot be guaranteed by Freddie Mac or Fannie Mae;
       The mortgage was taken out prior to January 1, 2009;
       The mortgage is either past due or loan is about to go into default;
       The amount  owed on the first mortgage is equal to or less than:
              - $729,750 for a single-family home
              - $934,200 for a 2-unit property
               - $1,129,250 for a 3-unit property
              - $1,403,400 for a 4-unit property;
        There is a hardship such as a reduction of income, medical expenses or a divorce; and
        The property isn't condemned.
     An additional benefit of a HAFA short sale is up to $8,500.00 may be deducted from the reduced payoff to the first mortgage to cover subordinate mortgages and other liens. In order to be considered for a HAFA short sale a request must be submitted before December 31, 2013 and the transaction closing date must be on or before September 30, 2014. In order to receive the relocation benefits the borrower(s) must provide proof of occupancy which is usually a utility bill in the name of the borrower-occupant. If you are already in foreclosure in order to be considered for HAFA eligibility, a request for HAFA:
   Without a purchase offer – must be received greater than or equal to 60 calendar days from the foreclosure sale date or law day for Connecticut borrowers(if applicable)
     With a purchase offer – must be received greater than or equal to 7 calendar days from the foreclosure sale date or law day for Connecticut borrowers (if applicable). 
     The assistance of an experienced attorney can help borrowers satisfy the sometimes difficult requirements both substantive and bureaucratic that can make obtaining HAFA approval more difficult than it should be. Furthermore, in Connecticut a short sale is a foreclosure alternative that is an acceptable matter to be included in the court's foreclosure mediation process. This mediation process allows the borrower defendant to negotiate and obtain short sale approval while the foreclosure process is put on hold with the help and assistance of a court mediator and in many cases their own attorney who can help guide them through the process. For more information about HAFA short sales please go to the following link:  Please do not consider my use of a link to a Bank of America HAFA site as an endorsement in any way of this particular lender since the opposite is true based on the hardships my clients have experienced in dealing with this lender.