More Sellers to Qualify for HAFA Short Sales after 6/1/12

Posted on 30. Apr, 2012 by ctlms in Foreclosures, My Blog, Real Estate, Short Sale

More sellers, including investors, may qualify for HAFA after June 1, 2012!

The Treasury Dept issued an updated Directive to HAMP and in turn HAFA back in March with an effective date of 6/1/12

Some welcomed news is coming to short sales, unless Fannie Mae or Freddie Mac owns your loan.

There are currently 3 different versions on the Home Affordable Foreclosure Alternative (HAFA) short sale program.  Fannie Mae and Freddie Mac each have their own program guidelines, and then there is Treasuries version that covers everyone else.

The Treasury version has been ever evolving since inception and for the most part those changes have been positive.

Up until now the 2 biggest reasons that borrowers did not qualify for HAFA were either that the property had been non-owner occupied for too long or the borrower's mortgage payment was lower than 31% of their Gross Income.

Both of these issues are being addressed in the upcoming changes.

Owner Occupancy

With these new revised guidelines there will no longer be any occupancy requirements for HAMP modifications or HAFA short sales for Non-Fannie Mae or Freddie Mac owned loans.  This means that even investor owned properties may qualify.

31% Gross Income Rule

This guidelines still exists.  However a new Tie 2 eligibility has been added that can be used to further evaluate borrowers whose mortgage payment is already below 31% of their gross income.  This will allow for more of their overall financial picture to be considered when determining if there is a financial hardship.

The bottom line is more non-owner occupied properties including properties that were never owner occupied and more financially strapped borrowers will qualify for HAFA.  HAFA gives a seller the best chance of walking away from a short sale with full forgiveness of debt.

Sean Wilder

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2 Responses to “More Sellers to Qualify for HAFA Short Sales after 6/1/12”

  1. Karen R. Spell 19 May 2012 at 7:14 am #

    Sean you speicify these changes only apply to NON fnma or freddiemac loans. I cannot find that info anywhere. In fact it seems that FHA and VA do not yet qualify for HAFA but Freddie Mac and FNMA loans can if they meet the additional criteria. I am trying to stay up to date please advise.

    Karen

    • ctlms 19 May 2012 at 9:48 am #

      Karen,

      FHA and VA loans do not qualify for HAFA. HAFA is actually very closely based on the FHA Pre-Foreclosure sale program which has been around for decades.

      As for HAFA, there are 3 versions of HAFA;

      1. Fannie Mae has their own version
      2. Freddie Mac has their own version
      3. The Treasury version which applies to all other loan types, investors and servicers that are participating in the program.

      The changes I wrote about apply to the Treasury version only. Fannie and Freddie have not made any changes to their program guidelines in a very long time while the Treasury version has been constantly evolving.

      Hope that clears that up for you.