Streamlining Short Sales for Home Owners and Home Owners Nationwide

Just over a couple of years ago, the federal government launched the Home Affordable Foreclosure Alternatives (HAFA) program.  It was supposed to streamline the short sale process for home owners and home owners nationwide.  This article provides an update on HAFA.

How does HAFA benefit home owners?

Home owners who don’t qualify for a loan modification can apply for a short sale through HAFA.  If the home owner qualifies for a HAFA short sale, the difference between the sale price of the house and the loan balance is forgiven.  In addition, HAFA offers qualified home owners $3,000 for moving expenses.

How well is HAFA working?

From April, 2010, to December, 2010, HAFA had disbursed just $9.5 million of the $4.1 billion in its budget.  And, through May, 2011, only 8,541 HAFA short sales had been completed.

However, HAFA short sales have increased.  There were only 320 HAFA short sales pending in September, 2010. Now, there are 18,000 pending nationwide.

What went wrong with HAFA?

Because the loan balance is forgiven with HAFA short sales, lenders cannot collect that amount.  Lenders can collect the loan balance on short sales that go through them, so the majority of short sales are still handled by individual lenders’ programs.  Although HAFA provides a $1,500 incentive to the lender, it isn’t enough to entice them to go along with the program.

What’s next for HAFA?

The HAFA program expires at the end of 2013, and by then, the U.S. Treasury hopes to have a model process with uniform documents that banks could use to speed the process and avoid greater losses that come with foreclosure.  In the meantime, changes are being made to HAFA to ease eligibility requirements.

Links:

Short sale

http://www.realtor.org/library/library/fg335

HAFA

http://www.realtor.org/government_affairs/short_sales_haf

How does HAFA benefit home owners

http://www.bankrate.com/finance/real-estate/hafa-short-sale-rules-may-help-sellers-1.aspx