Hafa Encourages More Short Sales According To St Louis Mortgage Analysts

Consumers have been bombarded with daily news about what Washington is doing today to save our economy from this sagging real estate market.

Banks have not been strong advocates of the short sale process. But this ideology is changing more and more everyday in an effort to stop this foreclosure mess.

A short sale enables the homeowner to leave their home while not getting the devastating hit on their credit report compared to a foreclosure entry.

This alternative process allows banks and lending companies the opportunity to save money by avoiding the more formal foreclosure avenue.

Now this may seem to be a more preferable choice for bankers to readily embrace but the opposite has been true to the dismay of the St Louis lending community.

This apathetic attitude may be due to the fact that short sales take a longer period of time to be completed with the average taking 60 days or longer.

And if the time frame wasn't the culprit, they can seem to be a loss cause when other lenders have liens on the distressed house.

Not surprising is the strong push by the National Association of Realtors urging the United States Treasury Department to initiate a new program that would push the use of short sales on a regular basis.

Thus, the new federal program known as HAFA or the Home Affordable Foreclosures Alternatives came to be in existence as of April 2010.

Here are four main characteristics of HAFA's terms for short sales:

I. There are strict deadlines that all parties must meet

II. Financial incentives; includes $3000 to assist the homeowner to move; $1500 for servicers to cover costs; $2000 for investors who will allocate as much as $6000 of the sales proceeds to go to other lien holders

III. By allowing the current mortgage holders to get pre-approved for these short-sale terms before the actual listing of the property for sale

IV. Consumers upon approval must be released from all future liabilities from their home loan debt

Banks and lenders have 10 business days to decide whether they will approve or deny this short sale application process for said consumer according to the St Louis finance review.

At this moment, there are over 1.1 million homes that have been foreclosed upon according to housing statistics.

And there are those who already predicted that both foreclosures and short sales will continue to rise.

The fourth quarter of 2009 also showed grim news. Close to nine percent of homeowners were in default on at least one payment according to the Mortgage Bankers Association.

This number pales in comparison to what other mortgage statistical companies report. They say the number is actually close to 4.9 million who are either behind or already in foreclosure.

The problem that HAFA faces is that their financial program cannot assist many of those houses facing this dilemma.

All St Louis home mortgage companies who participated in the federal bailout program known as the Home Affordable Modification Program or HAMP must also make this new program available to consumers too.

by: Floyd J. Tapia

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