Mortgage2USA.com
The Largest Non-Profit Mortgage Portal on the Internet.
" Short Sales "
Overview
Information contained on the site has been obtained from recognized sources believed to be reliable but has not been verified by us and cannot be guaranteed for its accuracy or completeness. Every effort has been made to keep all information current and factual and we invite visitors to our site to bring any errors or unfair practices to our attention. Mortgage2USA.com is not a mortgage banker or broker and does not have any financial interest in any of the financial companies or sites listed on any of our pages.This site does not buy or sell any securities and nothing on any of our pages should be considered an offer to buy or sell any securities.
2003 - 2011 Mortgage2USA.com
Second Lien Modification Program ( 2 MP )
Home Affordable Refinance Program ( HARP )
"HAFA" ( Short Sales ) Program Origin
In response to the severe meltdown of the Real Estate Market in the United States, the Government developed several National Programs to help both Homeowners and Lenders. The "Making Home Affordable Program" consists of 4 separate Programs to aid homeowners modify or refinance their mortgages as well as a foreclosure alternative called a "Short Sale". Here is a brief descriptyion of each of the 4 Programs :
The following Professionals are involved in today's Mortgage Markets :
Links :
Homeowners who pay their mortgages on time but are not able to refiance to take advantage of lower mortgage rate, would be aided by this Program.
Home Affordable Modification Program ( HAMP )
Homeowners who are having problems paying their current mortgage due to reduced earnings or increases in the mortgage rate, would benefit for this Mortgage Modification Program.
Home Affordable Foreclosure Alternatives Program ( HAFA )
Homeowners who are able to have their first mortgage modified under the "HAMP" may be able to use this Program to lower their payments on their second mortgage.
Homeowners who feel they can no longer afford their home, but want to avoid the negative effects of foreclosure, may be aided by this Program. They will enter into a "Deed-in-Lieu of Foreclosure" or "Short Sale".
Since we are concentrating on "Short Sales", we will define just the "HAFA" Program here. "Short Sales" are when homeowners sell a home for LESS than the amount they owe on the MORTGAGE, and their LENDER typically FORGIVES the amount "SHORT". "Short Sales" can only be done with the approval of a lender. Some of the reasons a Lender would agree to a "Short Sale" is that a foreclosure is an expensive process for lenders, and depending on the circumstance, could be enough reason to agree to the "Short Sale". In addition, as the government programs continue to be implemented, lenders may get incentives in exchange for faciliting "Short Sales" on qualified loans that cannot be modified under the government's initiatives.
" HAFA " - Short Sales
In 2009, the U.S. Treasury Department introduced the "HAFA" Program to provide a viable option for homeowners who are unable to keep their homes through the existing Home Affordable Modification Program (HAMP). The "HAFA" Program took effect on April 5, 2010 and ends on December 31, 2012.
"HAFA" ( Short Sales ) Program Provisions
Complement the "HAMP" Program by providing a viable alternative for homeowners who are "HAMP" eligible but nevertheless unable to keep their home.
Uses homeowners financial and hardship information already collected in connection with consideration of a loan modification.
Allows homeowners to receive pre-approved "Short Sales" terms before listing the property ( including the minimum acceptable net proceeds.)
Requires homeowner to be fully released from future liability for the first mortgage debt ( no cash contribution, promissory note, or deficiency judgement is allowed).
Uses standard processes, documents and timeframes/deadlines.
Provides the following financial assistance :
$ 3,000 for homeowner relocation assistance. Homeowner collects at the closing. The homeowner is fully forgiven of the debt, including the deficiency that remains after the sale.
$ 1,500 for loan servicers to cover administrative and processing costs.
Up to $ 2,000 for investors who allow a total of up to $ 6,000 in "Short Sale" proceeds to be distributed to subordinate lien holders, on a one-for-three matching basis.
Requires all loan servicers participating in "HAMP" to implement the "HAFA" Program in accordance with their own written policy, consistent with investor guidelines. The policy may include factors such as the severity of the potential loss, local markets, timing of pending foreclosure actions, and homeowners motivation and cooperation.
"HAFA" ( Short Sales ) Program Qualification Requirements
FHA or VA Loans are not eligible
The property must be the homeowners primary residence. This can include certain vacant properties if the homeowner has recently moved 100 miles or more for employment purposes.
The loan must be the first mortgage on the property
The loan must have originated before January 1, 2009
The homeowner must be behind in payments or can foresee default in the near future.
The unpaid balance cannot exceed $ 729,750. This amount can be exceeded in some cases for two to four unit dwellings.
The homeowner's monthly mortgage payment must be more than 31 % of the homeowner's gross income.
The homeowner receives the pre-approved "Short Sale" terms before the property is even listed. This allows the homeowners to be more aware of how the entire process will go. In addition, the terms will include the minimum amount of net proceeds and closing costs the bank will be willing to accept.
The homeowners sends a "Request for Approval of Short Sale" ( RASS ) to the mortgage servicer who must approve or deny the request in a timely manner. If denied, the servicer must state why. If approved, the servicer can require that the closing takes place within a reasonable time frame after their approval. Unless the homeowner agrees, the closing cannot take place less than 45 days from the date of the sales contract. Local or state laws must be followed in respect to the release of the first mortgage lien by the servicer. If there are no laws in effect, the limit is 30 days. Investors are not allowed to seek a deficiency judgment on any of the debt that was forgiven or any debt that may remain after the sale has taken place. The homeowner is forgiven of it all.
The sale of the property must be considered "arms length", meaning that the homeowner may not sell the property to a relative or anyone else they may have a close relatinship with.
The homeowner will not be taxed on the forgiven debt if the amount is less than what was used for acquisition, construction or rehabilitation of their home. If the amount forgiven does exceed this, it could be considered income for tax purposes.
The buyer of the property in the "Short Sale" cannot resell the property for at least 90 days.
How to proceed if you are considering a "Short Sale"
Before a homeowner considers applying for a "Short Sale", the U.S. Department of Housing and Urban Development (HUD) recommends that the homeowner consults a HUD Approved Housing Counseling Agency. This service is completely FREE and no fees or costs are involved, so do not get involved with any agency that requires any fees or charges.
If you wish to fill out the "Short Sale Worksheet", we will see where the closest Counseling Agency to you would be. There is no fee of course. CLICK HERE
HUD has a website that allows you to select your state to find Councelors. GO THERE
Look up your Loan - You need to know who owns your Loan.
If you wish to fill out the "Short Sale Worksheet", we will see who owns your loan. There is no fee of course. CLICK HERE
You can use the Making Home Affordable website. GO THERE
You can search the List of Mortgage Servicers GO THERE
Find a Realtor, who will help with the process at no cost or fee. If you plan to sell the property on your own, you may want to view websites where you can list your property. Or, consulting a Realtor may be a better solution since they may have experience with "Short Sales" and can answer your questions and help work with the Lender. Since there are Forms that need to be filled out and submitted, a Realtor may be able to assist with this process as well.
If you wish to fill out the "Short Sale Worksheet", we can send you the name of a Realtor who may be able to help. There is no fee of course. CLICK HERE
There are several websites that list Realtors. Some advertise that they have "Short Sale" experience, but there is no listing yet of Realtors located by area that have "Short Sale" backgrounds. The National Association of Realtor's website allows you to search for Realtors by location but not by "Short Sale" experince. GO THERE
Legal help may be appropriate. If your situation involves legalities, you may need to consult an attorney who has knowledge of "Short Sales". This may be more difficult as no listing of "Short Sale" Attornies has yet to be compliled on the internet.
If you wish to fill out the "Short Sale Worksheet", we will try to find an Attorney who may be able to help. We charge no fee of course, however, you will need to ask the Attorney what fees he will charge. CLICK HERE
There are several Legal websites available including Lawyer.com where you can search for Real Estate Lawyers.. GO THERE
Contact your Lender or Loan Servicer. After you have consulted with a Housing Counseling Agency, a Realtor familiar with "Short Sales" and an Attorney if one is necessary, you are ready to contact the Lender or Loan Servicer. This contact may be done through the Realtor or Attorney on your behalf.
If you qualify for a "Short Sale", and your Lender or Loan Servicer offers the Program, Forms including the "Request for Approval of Short Sale" will need to be filled out. This is where a Realtor and/or Attorney familiar with "Short Sales" can help. Here are some of the Form involved . . .
HAFA Short Sale Agreement (SSA). ( Available at Fannie Mae )
HAFA Request for Approval of Short Sales (RASS). ( Available at Fannie Mae )
HAFA Alternative Request for Approval of Short Sale
HAFA Form 4506-T Request for Transcript of Tax Return
HAFA Request for Modification and Affidavit (RMA)
Pre-Sale Approved List Price. The Lender/Servicer will establish the List Price they will accept, ( the minimum amount they must receive after sales costs ), from the sale of the property. They will also identify the sales costs, broker commissions and closing costs, that may be deducted from the final sales price. At his point, you can list the property for sale at the Approved List Price using a Realtor who is familiar with "Short Sales".
Offers.- When offers are received to purchase the property, the required documents are submitted for approval by the Lender/Servicer.
Closing. - When on Offer is accepted by the Lender/Servicer, a closing is scheduled. Once the sale closes, the homeowner is released from all responsibilities for repaying the mortgage. The homeowner also receives $ 3,000 to help pay some of the moving expenses. In the event the property is sold for a higher amount than the Approved List Price, and the funds allow the homeowner to pay off the entire amount due on the mortgage instead of the Approved List Price, the homeowner will not be entitled to the $ 3,000.
In an effort to aid homeowners who have been effected by the economic situation over the past several years, the U.S. Government has established several Programs to help homeowners move out of homes they can no longer afford with as little damage to their credit as possible. Because these Programs involve several entities and considerable paperwork, the process can be overwhelming. While homeowners can try to maneuver the process themselves, it is recommended that they seek the help and advice of a HUD Approved Housing Counselor, a Realtor with "Short Sale" experience and a Real Estate Attorney if needed. The process can be difficult for the in-experienced, but help from the Government is available at NO COST. And most Realtors should also offer to help at NO COST, since they will earn a commission when the property is sold.
