Short Sale Programs

Short Sale programs like the Home Affordable Foreclosure Alternatives (HAFA) is a federal government program to help homeowners who cannot afford to pay their mortgages….want to avoid foreclosure….. and have exhausted all other loan modification options.  The homeowner must meet certain hardship eligibility criteria, e.g., a divorce, loss of job, death of spouse or change in household income.

Short sale programs allows homeowners to sell their home as a short sale or in layman’s terms — selling the home for less than the outstanding mortgage balance.  The lender will settle any outstanding mortgage debt and offer homeowners other benefits.  Depending on the mortgage lender, these benefits could include relocation assistance up to $3,000 to those homeowners who must vacate after completing the HAFA short sale or a deed-in-lieu of foreclosure.  Depending on your mortgage lender you may be entitled to other incentives that are available to eligible homeowners.

The best time to consider a short sale is after the homeowner has exhausted all efforts to remain in the home and wants to leave the property even though they may owe more on the mortgage than the current fair market value.  The homeowner’s request should be submitted before or after a short sale offer is received.

To initiate a HAFA Short Sale, a homeowner should contact their mortgage company and request a Short Sale package.  Or, contact a trusted Realtor who is familiar with the short sale process.  A Realtor will be able to initiate the short sale via the Equator system, which is an automated short sale program where specific documents, e.g., bank statements, pay stubs, etc., are stored.  The Equator system was initially developed by Bank of America to track their short sales and to provide a central location for email communications and other requested documents.  Now, the Equator system is currently being used by other established mortgage lenders, e.g., Chase Bank, GMAC, Wells Fargo, and Citi Bank.

Applying for the HAFA Short Sale program offers homeowners a quick option to receive a faster short sale decision and a suggested list price prior to receiving a purchase offer.  This decision is usually made within 10 business days upon receipt of an offer.  Other benefits include a deficiency waiver where the mortgage debt on the first and subordinate liens will be settled through the short sale program.  In addition, this program ensures that no legal action can be taken against the homeowner or the outstanding mortgage debt.   The HAFA short sale program is scheduled to end on December 31, 2013, and the transaction must close on or before September 30, 2014.  Don’t procrastinate — you still have time to apply!