Major Changes Coming to HAFA

As of June 1, there will be significant changes to the HAFA program. The updates will allow a homeowner to remain current on their mortgage, qualify for HAFA, and go through a short sale with less of an impact on their credit.

The major changes include:

▪ The deadline for submitting for HAFA eligibility will be extended a full year, from December 31, 2012 to December 31, 2013.

▪ The removal of occupancy requirements: HAFA until now has required homeowners to have lived in the property within the last 12 months. This requirement is being removed.

▪ The $3,000 relocation incentive will be limited to properties occupied by an owner at the time of the short sale.

▪ Mortgage payments will be allowed to exceed 31% of the homeowner’s gross monthly income. The effect of this will be to allow a homeowner to remain current on her mortgage and still qualify, minimizing the overall potential impact to her credit, and certainly shortening the waiting period to purchase in the future.

▪ Junior lienholders may receive up to a maximum of $8,500, up from $6,000 previously (these are incentives to junior lienholders).

▪ There are also new mandates regarding what the lender can state on the borrower's credit report that, reportedly, will lessen the impact on the borrower's credit rating.

We'll post any new information as we receive it. We have more information about HAFA here.

Buyer's Brokers: The most important step in buying a short sale

We get many questions from buyer's brokers about things they can do to make sure their client's short sale offer is approved. The single most important step you can take as a buyer's broker to ensure success in a short sale is this: Qualify the listing broker.

If the listing broker is unfamiliar with short sales, no matter what you do on your end, the chance of a successful outcome decreases dramatically. If your client is interested in a short sale property, call the listing broker and ask them these qualifying questions:

1) Who will be negotiating the short sale?

2) How long have they been negotiating short sales?

3) How many short sales have they closed?

4) Do they have experience with the HAFA process? (HAFA provides incentives for the seller such as a $3,000 relocation incentive, and an agreement by the lenders to forgive the debt, which increase the likelihood of seller participation in the short sale.)

5) What is their system for communicating with you, the buyer's agent, so you know how the transaction is progressing?

Asking these questions will help you determine whether the broker has the level of experience needed to successfully negotiate a short sale-- and it can save you and your client a lot of time and frustration.