The HAFA (Home Affordable Foreclosure Alternative) programs is going to be rolled out on April 5th and there’s a lot of hub-bub about it.  Let me ask you, did you remember or notice the HAMP plan?  Probably not.  Home Affordability Modification Program was a failure.  With good intentions, the servicers found out ways to get the most tax dollars and give the least relief.

As with the other programs available, your servicer has to VOLUNTEER to be a part of this.  It means more money for them to do loan mods and short sales, but it’s completely voluntary. Now the HAFA program comes out with 47 pages of content.  Let’s do an overveiw:

  1. If you can modify your loan instead of sell it short , you DON’T qualify!!! For instance, I know of several people who have shorted their investment properties simply because they were upside down. If they had waited until after April 5th, 2010 , they would have had to at least attempt to get a loan modification so that their payment was less or the same as the rent payment before selling them for less than the loan amount. Essentially they would not be able to do that again. (sell them first without attempting to modify).  This is assuming that the bank/servicer is volunteering on the HAFA program.
  2. A broker’s price opinion (BPO) and an appraisal will be one of the first things done and a short sale amount will be determined before the home is expected to go on the market. Now it’s anyone’s guess what the bank will take and this leaves most buyers in the dark for a long period of time. After April 5th, a price is chosen, the house is listed and that’s that!! Take it or leave it. Again, if the bank is volunteering to participate in this program.
  3. All offers must be responded to within 10 days. YES or NO.
  4. Sellers can stop paying their mortgage payments as soon as the short sale is approved and this lack of payment will not be a mark against their credit report.
  5. Sellers can get a bonus of up to $1,500 at settlement.  Keep in mind that in the past, the servicers would require that the seller waive their acceptance of these “bonuses” to allow for any past due HOA, Taxes or excessive closing costs.