Do you owe more on your home than it’s value? Are you considering a Short Sale to avoid foreclosure? One of the options is a HAFA Short Sale which could prevent a foreclosure which would have a devastating impact on your credit.
HAFA (Home Affordable Foreclosure Alternative) was introduced to help home owners who owe more money than than their home’s value. The advantage of a HAFA Short Sale is that it offers the home owners a fresh start since they can ditch their bad loan and literally buy a home that has equity. But not every borrower and every loan will qualify for a HAFA Short Sale since there are restrictions associated with the program.
HAFA guidelines which were revised in 2013 were designed to minimize the negative impact of a Short Sale on home owners credit. Let’s examine them closely:
1) Loan Balance: HAFA guidelines applies to the 1st liens with the balance NOT to exceed $729,750 for Single Family Homes. This means that if your Short Sale proceeds will cover the amount of your 1st lien, then you will not qualify for a HAFA Short Sale. This does not help the high-end home prices in California which are above this limit, but with the median California prices at less than 500,000 the program has some merits.
2) Origination Date: Your mortgage note should have been originated on or before Jan 1, 2000. However, if you have refinanced your mortgage then you will not qualify for a HAFA Short Sale.
3) Property Type: Both owner occupied and rental homes qualify for HAFA Short Sale. Commercial properties can not qualify for HAFA Short Sales. There is no restrictions on the Occupancy and even your Investor properties do qualify.
4) Short Sales Attempts: You can only apply for a HAFA Short Sale once every 12 months. If you have attempted a Short Sale in the last 12 months but did NOT accept the offer from your lender, then you might NOT qualify for a HAFA Short Sale.
Before you decide on you a Short Sale, you should contact Department of Housing and Urban Development (HUD) Home ownership Help site to see what other options are available to you.
Contact Us to see if you qualify for a HAFA Short Sale since it’s an ideal way to unload your underwater property.