A recent policy update to the Treasury Department’s HAFA (Home Affordable Foreclosure Alternatives) program will mean that more borrowers will be eligible to participate in the Obama Administration’s short sale program.
Here’s a closer look at some of the changes:
- Servicers are no longer required to verify a borrower’s financial information.
- A borrower’s reason for relocation no longer must be related to employment ; also, there is no longer a minimum distance requirement.
- A borrower may have moved up to 12 months before certain dates in the HAFA process but may not have purchased another home.
- Servicers aren’t required to determine if the borrower’s total monthly mortgage payment exceeds 31 percent of their gross income. However, borrowers will still be required to show a hardship.
- Servicers are now required to communicate approval, disapproval or a counter-offer no later than 30 calendar days after receiving the following: an executed sales contract, Alternative Request for Approval of Short Sale and a signed Hardship Affidavit.
- If an unsolicited borrower requests HAFA, the servicer has 30 calendar days to determine the borrower’s eligibility and, if eligible, send the borrower the Short Sale Agreement.
- HAFA will no longer impose a 6 percent cap on payments to each subordinate lien holder. The $6,000 aggregate limit is still in effect.
Servicers can initiate these changes immediately and must implement them by Feb. 1.
Hopefully, these changes will mean more short sales approvals — it’s still rough going with a lot of the lenders.
About the Author:
Lisa Broadwater, GRI, CDPE is a Central Oregon-based real estate professional who specializes in listing and selling homes, especially in Sisters, Tumalo, Redmond and Bend.