U. S. Treasury Dept. Short Sale Guidelines

These are the Home Affordable Foreclosure Alternatives (HAFA) program guidelines.
HAFA is an extension of the Home Affordable Mortgage Program passed by Congress in March of 2009. HAFA applies to loans not owned or guaranteed by Fannie Mae or Freddie Mac. Their versions of HAFA are imminent.

The companies I represent have a proven record of convincing your lender to follow these new guidelines. Servicers participating in HAMP are also required to comply with HAFA. This is momentous because there is credible evidence that servicers, because they benefit more from a foreclosure than a modification or short sale, have used subterfuge and treachery to avoid mortgage modifications and short sales. If you own a distressed mortgage you owe it to yourself and family to call me and get accurate information.

For this explanation, essentially short sale and Deed-in-Lieu of Foreclosure are synonymous. We accomplish both.

Information to understand about HAFA:

-HAFA complements HAMP by providing a viable alternative for borrowers (the current homeowners) who are HAMP eligible but nevertheless unable to keep their home.

-Allows borrowers to receive pre-approved short sale terms before listing the property (including the minimum acceptable net proceeds).

-Prohibits the servicers from requiring a reduction in the real estate commission agreed upon in the listing agreement (up to 6%).

-Requires borrowers to be fully released from future liability for the first mortgage debt (no cash contribution, promissory note, or deficiency judgment is allowed).

-Uses standard timeframes and deadlines. (Since we have the direct phone numbers to the decision-makers at all of the servicers and lenders, we are first to their phone every morning. We keep them on the phone until they agree to terms that benefit you, the distressed homeowner and us as investors.)

-Provides financial incentives: $1,500 for borrower relocation assistance; $1,000 for servicers to cover administrative and processing costs; and up to $1,000 for investors, allowing a total of up to $3,000 in short sale proceeds to be distributed to subordinate lien holders (on a one-for-three matching basis).

The forms, documents and requirements are the same as the Home Affordable Mortgage Plan mortgage modification requirements (HAMP):

The property must be the homeowner’s principal residence.

The homeowner is delinquent on the mortgage or demonstrates 'imminent default.'

The loan is less than $729,750 and was made before Jan. 1 2009.

The borrower's total monthly mortgage payment exceeds 31% of their gross income.

This development enables me to assume the position of property counselor first and application processor second.

We have methods to negotiate a short sale with your lender if your mortgage isoutside any of these guidelines. This includes Fannie Mae and Freddie Mac guaranteed mortgage loans as well as jumbo mortgage loans. Please contact me for details of our expertise outside these guidelines.

The short sale candidate must know that the short sale buyer-negotiator cannot specify the disposition of the deficiency. (The portion of the mortgage debt not covered by the sale of the home.)

With a short sale, the lender has three possible ways to cure the deficiency balance:

First, the lender can attempt to collect the deficiency balance from the seller after the property has closed.

Second, the lender may require the seller to sign an unsecured promissory note for the deficiency balance as a condition of agreeing to the short sale. If the new note is for less than the balance of the original debt, the difference would be considered canceled, (or forgiven) debt.

Third, the lender may agree to cancel the entire deficiency balance.

If the lender does attempt to collect the deficiency, the collection can be included in a debt settlement plan and negotiated down.

Although these guidelines are to become effective April 5, 2010, there is significant pressure to follow them immediately as agents like me follow these guidelines.

The program is set to expire on December 31, 2012.

The Bottom Line:

The most important resource in a successful and efficient short sale is a company experienced in short sale negotiations and have the capital to close on the distressed property immediately. The distressed homeowner should also have some assurance that their buyer will make a professional attempt to market the property to an end buyer.

ABF - Anything But Foreclosure

Along with negotiating a short sale purchase, we negotiate HOA dues, tax liens, lender comebacks; and create a legal paper trail that prevents your lender from collecting a deficiency in the future. A foreclosure doesn't allow for any of these benefits. A short sale will not damage your credit nearly as much as a foreclosure, which also remains on your credit report for ten years. A successful short sale is a win-win conclusion to a distressed mortgage. (The lender wins too, by the way; but that takes our pursuasion!)

Foreclosure?
Hell, I'm gonna shoot something!

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