The Approval Experts | San Diego Real Estate | Short Sales

What is HAFA:

HAFA is newly instated government-subsidized plan to give homeowners additional alternatives. HAFA, which stands for Home Affordable Foreclosure Alternatives, is a program designed for distressed homeowners who would like to sell their homes and avoid a foreclosure. This is program is for homeowners who owe more on their mortgage than the actual value of the home. What HAFA does is allow a participating lender to pre-approve the terms of the short sale and give the borrower at least 4 months to market and sell the property under a licensed real estate professional.

HAFA Eligibility:

- The property must be the borrower’s principle residence and not a investor property
- The loan must have been originated before 2009 and be a first trust deed
- Loan must be either delinquent or the delinquency must be reasonably foreseeable
- The current principal balance of the loan must be less than $729,751 for a single family home. The amount is higher for properties that are 2-4 units
- The borrower must qualify and be eligible, but unable to complete, a loan modification under the HAMP program (Home Affordable Modification Program)


HAFA Financial Incentives:

- This program gives $3,000 to the borrower for relocation expenses
- HAFA gives $1,500 to the servicer for each successful short sale
- $1 is given to the investor for every $2 paid to extinguish junior liens with a maximum incentive of $2,000 and not to exceed 6% of the unpaid balance


HAFA EFFECTIVE DATES:

The program started on April 5, 2010 and ends on Dec 31, 2012


HAFA Standard Procedure:

1. The lender will evaluate the loan modification under the Home Affordable Modification Program (HAMP)
2. The lender will evaluate the modification process and why the borrow was unable to complete through HAMP
3. The lender will issue a Short Sale Agreement (HAFA SSA)
4. The borrower will list the property for sale with a licensed real estate agent
5. Both the borrower and agent will market and sell the property
6. The borrower will submit the offer to the lender for a Request for Approval of Short Sale (RASS)
7. The Lender will approve the RASS within a period of 10 business days
8. The Sale will close escrow


HAFA Lender Evaluation:

Each participating lender in the program will have its own specific policy on the approval or rejection of the HAFA short sale based on a number of factors including but not limited to the severity of the loss, the borrower’s motivation and cooperation, market conditions, property valuation and a review of the title.


HAFA Short Sale Agreement (HAFA SSA) will including the following :

- A number that is acceptable to the lender either through a list price or the net proceeds.
- A full liability release for the borrower in regards to the deficiency amount of the loan
- Agreement that states the lender will not complete a foreclosure if the borrower cooperates with the terms of the Short Sale Agreement (SSA)
- An acceptable closing cost amount with up to 6% for allotted for real estate commission
- A notice that the sale must be an arm’s length transaction
- A notice that the buyer must agree not to resell the property within 90 days of closing


Tax and Credit Consequences:

As with any transaction of this nature we recommend you contact an attorney to further evaluate the type of financial, tax, legal or other consequences that may occur when performing this type of transaction.

If you are looking into the HAFA program or have any questions in regards to a short sale feel free to call the The Approval Experts at 858-345-3825. We would be happy to help answer any questions. We always recommend that those considering a short sale consult both a real estate attorney and tax attorney as each individual short sale is unique. We are located in the San Diego area, but have the ability to assist sellers throughout California.