Lowell MA-On December 28, 2010, the Treasury Department released another update to the Home Affordable Foreclosure Alternatives Program (HAFA). Not surprisingly, the Treasury Department was under the gun as a result of the program’s poor overall performance. According to the Congressional Oversight Panel (the Troubled Asset Relief Program watchdog) through 2010, only $4.3 million has been used for HAFA resulting in roughly 661 closed HAFA short sales since the program launched.
The changes will increase the number of eligible borrowers who may participate in the program and should expedite approvals. Servicers must implement the changes by February 1, 2011.
The Key changes are:
A borrower’s reason for relocation no longer needs to be connected to employment nor be of a certain distance from the property. Borrowers may have moved up to 12 months before certain dates in the HAFA process but may not have purchased another home. Vacant or rented properties will no longer be disqualified from HAFA so long as the property was the seller’s primary residence within the last 12 months
Servicers are not required to determine if the borrower’s total monthly mortgage payment exceeds 31% of gross income. Borrowers will still be required to show a hardship. However, investor may still require it.
Servicers are now required to communicate approval, disapproval, or a counter offer no later than 30 calendar days after receiving an (i) executed sales contract, (ii) Alternative Request for Approval of Short Sale, and (iii) a signed Hardship Affidavit.
If an unsolicited borrower requests HAFA, the servicer has 30 calendar days to determine the borrower’s eligibility and, if eligible, send the borrower the Short Sale Agreement.
Payouts to subordinate liens are no longer limited to 6% of the subordinate liens outstanding principal balance. The Max aggregate payout is still capped at $6,000. It is now up to the investor to determine their allowable %.
Real estate commission cannot be cut to less than 6%, even when pre-applying for the program. This was a major negative previously.
With the number of people upside down in their properties…and th job market the way it is…If you or someone you know that may be in trouble …and could use more information on their…options…to keep or sell their home please contact me.
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