Answering your questions on Home Affordable Foreclosure Alternative program HAFA

Answering your questions on Home Affordable Foreclosure Alternative program HAFA

What is a short sale? It is when you try to sell your home for less than what you owe and is sold at the lower price then what you owe the lender.

What is the Eligibility for HAFA? You can request for a short sale or deed in lieu if you know you do not want to keep the home. However, if you do not qualify for a loan modification you may apply for HAFA. Under this program if you have entered into a loan modification under HAMP, you may qualify if you break your trial modification, or if you miss at least 2 consecutive payments during the trial modification.

A). How long will it take to get approved under HAFA? Mortgage servicers must evaluate homeowners for HAFA within 30 days after one of the eligibility criteria is met (see above). If the homeowner is eligible, the servicer will send a Short Sale Agreement (SSA), a contract between the homeowner and the servicer.

B). What will be included in the SSA? A list price approved by the servicer;

The length of time the property will be marketed for sale;

An agreement releasing the homeowner from all future liability after the property is sold;

The amount of the monthly mortgage payment, if any, that the borrower will be required to

pay during the term of the SSA.

Information about $3,000 in relocation assistance after closing; and

An agreement that so long as the borrower performs in accordance with the terms of the SSA,

C). What if I have other liens on my property? If you do have other liens like a second mortgage, heloc mortgage etc., you will have to work with your servicer to find some type of negotiation of the release of those other liens, in order for the short sale or deed in lieu to be completed. Under the HAFA program they may provide some funds to payoff second liens.

D). What kind of documents will I need to give to the lender? Usually you will need to provide the following: listing agreement, income documents, tax returns, hardship letter, short sale lender application, and bank statements. Other documents maybe requested from the lender.

E). How long does it take to get approved for a short sale? It is not a question of getting approved, it will depend if the lender accepts your buyers offer. Because you are selling the home for less than what you owe the lender reserves the right to deny, or counter offer.

F.) If I do not want the house what are my options? Under HAFA you can apply for a deed in lieu, meaning you are voluntary giving the house back. There is an approval process for this type of request it will vary from lender to lender.

G). How do I find out who servicer's my loan? Under the HAFA and HAMP programs provided by the government you will need to know if Fannie or Freddie owns your mortgage. You can visit the Making Home Affordable website to determine if your loan is owned by Fannie or Freddie. Click on Loan lookup.

4).Other Short Sale General Questions and Answers

A). Do I have to list my property with a Realtor? YES. Lenders will only allow you to list with a licensed Realtor; you must provide a written listing agreement between you and the realtor.

B). What are the tax implications if I do a short sale? In 2007 the mortgage debt relief act was enacted to allow tax payers to exclude income from the discharge of debt in regards to their principal residence. Debt reduction through a mortgage restructuring and or in connection with a foreclosure may qualify for the relief. For further details you can visit the IRS.gov website.

C). How will a short sale or deed in lieu effect my credit? So a short sale and or deed in lieu may not be as bad as a foreclosure, however, it will stay on your report for at least 2-3 years, perhaps even longer. This will certainly give you plenty of time to rebuild your credit history and to position yourself to purchase another property in the future.

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