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New Short Sale Rules In Effect Since August 1, 2010

New Short Sale Rules In Effect Since August 1, 2010

On August 1, 2010, all Freddie Mac and Fannie Mae loans were mandated to adhere to the guidelines addressed in the Home Affordable Foreclosure Alternatives Program (HAFA). This initiative offers eligible borrowers who did not qualify for or complete a permanent modification under the Home Affordable Modification Program (HAMP) to avoid foreclosure, financial incentives to servicers and borrowers who utilize a short sale or deed-in-lieu of foreclosure, and the opportunity to preserve the condition and value of the property.

Common Questions About HAFA

1.  How do I know who qualifies for HAFA and a “Short Sale” or Deed in Lieu of Foreclosure?

On pages 3 and 4 the qualifications are listed the following requirements are the considerations.

The property is the borrower’s Principle Residence:

■ The mortgage loan is a first lien mortgage originated on or before Jan. 01, 2009

■ The mortgage is delinquent of default in reasonably  foreseeable; (exceptions apply*)

■ The current unpaid balance is equal to or less than  $729,750.00 (more for units)

■ The borrower’s total monthly mortgage payment (as defined in Sup Directive (09-01) exceeds 31 percent of the Borrowers income.

*EXCEPTION: When Freddie Mac announced the Program would become mandatory for all their loans they stated that the loan must be 60 days delinquent to qualify for HAFA consideration.

2.   Are there monetary incentives for utilizing a short sale or a deed-in-lieu?
Yes. Servicer Incentives are: $2,200 for Short Sales and $1,500 for Deed-in-lieu. Borrower Incentives are: $3,000 for both Short Sales and Deed-in-lieu to assist with relocation expenses.

3.   When and how will I find out a “HAFA” short sale is
an option?
On page 13 there is a section mid-way down the page titled STANDARD FORM DOCUMENTS. On page A-1 in the “Forms Section”, you will see a draft letter designed to be sent to the borrower. This letter details “HAFA” and the “SHORT SALE PROGRAM”. This multi-page letter, sent by their lender is how many people will find out a short sale is an option.

4.   Can I sell my home to my brother?
No. On page 7 Notice that the sale must represent an arm’s length transaction and that the purchaser may not sell the property within 90 calendar days of closing, including certification language regarding the arm’s length transaction that must be included in the sale contract.

5.   It is my understanding that I can get a Pre-Approved Sales Price for my home under this program before any marketing for the property is done? Yes. On page 5, half way down the page in bold print is the title “Minimum Acceptable Net Proceeds”. This means the bank will evaluate the sale price of the home in advance of the time the property is marketed by a Real Estate Agent.

6.             If I don’t have any money to make my mortgage payment how am I going to pay a Real Estate Broker? In section 1 d. Titled “ Real Estate Commissions it states “We will pay real estate commissions as stated in the listing agreement between you and your broker, not to exceed six percent (6%) of the contract sales price, to be paid to the listing and selling brokers involved in the transaction” There are other references to qualifications of the Real Estate Broker and things they must do on pages 6 and 7.

Gary Giffin, Middleton & Associates Real Estate. If you’d like to learn more about Gary or What your San Diego Homes are For Sale, visit his website, or San Diego Coastal Real Estate at , email him,, or call him for an appointment at 858-401-0204


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