GOVERNMENT SHORT SALE GUIDELINES
Government Shortsale Guidelines
The Newest Government Foreclosure Acronym- HAFAP or Home Affordable Foreclosure Alternatives Program will definitely bring some strong incentives for lien holders to move quickly on short sale files.
Beginning April, 2010, the Home Affordable Foreclosure Alternatives Program (HAFAP)and its recently issued guidelines should help to streamline the short sale process and reduce the backlog that is plaguing home buyers and lenders now. Not only should the process be shortened dramatically, it will also mean less vacant and vandalized properties, a common problem in neighborhoods everywhere.
Here art the new short sale guidelines.
these will go into effect April 5th:
- Borrowers will now receive pre-approved short sale terms BEFORE listing the property. These terms will also include the minimum net proceeds that the lender will accept. A great time saver for both the seller and the real estate professional.
- The mortgage servicer will now have just 10 days to approve or disapprove a short sale request. Paperwork reduction will also end a lot of the current short sale headaches.
- The new guidelines will now prohibit loan servicers from requiring a reduction in the commission earned by real estate professionals that was agreed on in the listing agreement. Agents no longer have to take a commission cut for all of their hard work.
- For the homeowner, there will be a $1500 relocation assistance incentive. Helps take some of the sting out of losing a home.
- Also for the homeowner, the program requires that the borrower is fully released from future liability for the first mortgage debt. Again, a much better option than letting the house foreclose and having it haunt your credit for up to 10 years.
- Financial incentives will also be in place for the mortgage servicers – $1000 for every completed short sale transaction.
- Qualifying properties must be the homeowner’s principal residence, and the homeowner must be either already delinquent on the mortgage, or show that default is imminent. There are also some other qualifiers regarding debt to income ratios; consult with a mortgage professional for the complete list.
The Home Affordable Foreclosure Alternatives Program does not apply to loans owned or guaranteed by Fannie Mae or Freddie Mac. Fannie and Freddie, which currently cover over half of the mortgages in the US, already are working on a similar program. Details of their guidelines should be released in the coming weeks.