I received an in depth review of the Treasury’s Home Affordable Foreclosure Alternatives (HAFA) program, passed my exam and am now HAFA certified. Home Affordable Foreclosure Alternative (HAFA) allows borrowers to receive pre-approved short sale terms prior to listing their home in the Multiple Listing Service.  Hooray!

Eligibility Requirements:

*Property is borrower’s primary residence
*Loan is a first trust deed originated on or before January 1, 2009
*The mortgage is delinquent, or default is reasonably foreseeable
*The current unpaid principal balance is no more than $729,750 (single family, higher amounts for 2-4 owner occupied units)
*The borrower’s total monthly payment exceeds 31% of the buyers PITI (principal, interest, taxes and insurance)

Benefits to the borrower/seller:

*Borrowers will be released from future liability for the first mortgage lien. Program offers the first lien holder up $6,000 to distribute to 2nd or 3rd lien holders (and they then would also release the borrower from future liability
*Provides up to $3,000 for relocation assistance
*From what I can determine the servicer must make a short sale decision within 10 days of a completed package

Potential Pitfalls:

*Negotiating Subordinate Liens are seller’s (Realtors) responsibility
*Borrowers are responsible for: delinquent property taxes, HOA and any other voluntary liens

If you meet the eligibility requirements above, other options include:

If you have tried a loan modification without success, servicers are now more motivated.  Home Affordable Modification Program (HAMP)  includes opportunities to modify or refinance your mortgage to make your monthly payments more affordable. Beware of Foreclosure Rescue Scams - Help Is Free.   Click here for more information

Deed in lieu of foreclosure: According to Wikipedia, A deed in lieu of foreclosure is a deed instrument in which a mortgagor (i.e. the borrower) conveys all interest in a real property to the mortgagee (i.e. the lender) to satisfy a loan that is in default and avoid foreclosure proceedings.

Potential short sellers should always consult with their attorney and tax professional as short sale ramifications will negatively impact your credit and there could be possible tax consequences.