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The Federal Government’s Home Affordable Foreclosure Alternatives (HAFA) Program went into effect on April 5, 2010 and is designed to provide incentives for borrowers to do a short sale (or a deed in lieu) in order to avoid foreclosure. HAFA assists eligible homeowners in quickly implementing short sales by providing financial incentives to participating lenders.
HAFA allows a homeowner to remain current on their mortgage, qualify for the HAFA program, and go through a short sale with less of an impact on their credit score than a foreclosure or regular short sale. The deadline for submitting for HAFA eligibility has been extended to December 31, 2015.
Here are some features of the HAFA program:
- Effective February 1, 2015, a seller may receive up to $10,000 in relocation incentive. The incentive is limited to properties occupied by an owner at the time of the short sale.
- Mortgage payments are allowed to exceed 31% of the homeowner’s gross monthly income. The effect of this is to allow a homeowner to remain current on her mortgage and still qualify, minimizing the overall potential impact to her credit, and shortening the waiting period to purchase in the future.
- Second mortgage holders may receive up to $8,500 from the proceeds of the sale in exchange for release of the mortgage debt. Other parties in the sale – usually the buyer – can also contribute funds to the second mortgage holder to help settle the debt. This makes negotiating the sale with a second mortgage holder much easier.
- Mandates regarding what the lender can state on the borrower’s credit report lessens the impact on the borrower’s credit rating.
Washington Property Solutions Can Help Guide You Through The HAFA Process
Call us at 425-381-2233 for more information.
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Washington Property Solutions
Windermere Real Estate /East Inc.
11100 Main Street, Suite 200, Bellevue, WA 98004