If you must sell your home for an amount that is less than the mortgage, take heed of the new rules pertaining to short sales. As a part of the Treasury’s Home Affordable Foreclosures Alternatives (HAFA) program, these rules will facilitate the sale in a number of ways. The biggest difference is the increase in relocation payout from $3,000 to $10,000 for qualified homeowners. In addition, the lender must waive the deficiency balance of the mortgage and forgive the full loan amount.
These new rules make the short sale process much shorter and easier to navigate. Thanks to the HAFA, sellers who plan on selling their home for a value that is less than the mortgage will no longer proceed with uncertainty. The new rules provide a reliable timetable no matter which lender is involved.
While the lender will still receive the sale’s proceeds, the process won’t take as long. In the past, it has taken lenders months to determine whether they’ll accept an offer. This often led to the buyer giving up on the purchase and opting for another home. HAFA rules dictate that the lender must decide the minimum acceptable price at the outset of the sales process. Both the lender and the homeowner will have short deadlines to adhere to. The seller will receive up to $10,000 toward moving expenses if he leaves the home in good condition.
Those who face a short sale should understand that HAFA is less desirable than the Home Affordable Modification Program (HAMP). If a homeowner misses HAMP payments or rejects a loan modification offer or isn’t provided with the option of a trial modification, he’ll have passed the first criteria for a HAFA short sale. Also, the lender must not have a non-HAMP loan modification for the homeowner. If a homeowner meets these conditions and qualifies for HAFA and proceeds with a short sale, he’ll receive a short sale agreement from the lender. He then has two weeks to offer a response. Once he has responded, he is given four months to sell the home.
The homeowner then finds a real estate agent while the lender finds someone to assess the home’s value. The homeowner continues to pay his mortgage but only up to 31% of his monthly income. As he waits for offers, the lender will determine the minimum acceptable net proceeds. If a buyer manifests within four months, the lender must approve the short sale within 10 days. If the offer meets the minimum acceptable net proceeds, the lender must accept it.
For more information and to see if you qualify, please call one of our associates at Adams & Associates, PA at (305) 824-9800 for a free consultation.