HAFA INCENTIVE - Can Borrower/seller Elect Not To Receive The $3,000 Incentive?

Does anyone know if the Borrower/Seller can elect not to receive the $3,000 incentive to contribute either to buyer closing costs or just to effectively increase the net and lower the sale price?

Thanks!

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Permalink Reply by Laura Marshall on August 11, 2011 at 6:31pm

No. The borrower can not contribute any of the HAFA proceeds to anything. I recently had one where a judgement showed up at the last minute. Not only could the borrower NOT contribute towards the judgement but no one else could either...not the agents or the buyer. Our only option was to cancel and go traditional or pay off the judgement outside of escrow.The funds are to help them move. We had to take care of the judgement outside of escrow before we were able to close. If we didn't, the file would have been closed and we would have had to start from the beginning with a traditional short sale.

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Permalink Reply by Brenda Rogers on August 11, 2011 at 6:36pm

In an FHA short sale, the borrower can elect not to receive their $1,000 incentive. I was wondering if you can do the same thing in a HAFA short sale. As you know, an FHA Approval To Participate includes a net sale proceeds number which just happens to be 88%, 86% or 84% of the appraised value. I often have the Seller elect not to receive their incentive if the offer to purchase is below the value set by the ATP in order to meet the net sale proceeds required. I would like to get a definitive answer from someone as to whether or not you can do the same thing in a HAFA approved short sale with an SSA in place. Not pay any liens or closing costs or anything like that. Just to increase the net if the purchase price is lower.

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Permalink Reply by Kevin - Greenville, SC on January 14, 2012 at 12:34am

While the HAFA incentive does come out of the net proceeds it is not suppose to affect the approval.

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Permalink Reply by Kevin - Greenville, SC on January 14, 2012 at 1:02am

However, borrowers may not use this relocation incentive to pay for the release of subordinate
mortgage or non-mortgage liens recorded against the property and may not be required by the
servicer, as a condition of sale, to utilize the relocation incentive to pay any transaction expenses.

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Permalink Reply by Jeff Payne on August 11, 2011 at 6:39pm

Brenda, I closed a HAFA with EMC and in the end we were short by about 800 and EMC let the seller use part of their $3000 toward the amount we were off.

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Permalink Reply by Brenda Rogers on August 11, 2011 at 6:46pm

Yes! I knew it could be done. Thanks. By the way....NEVER, NEVER, NEVER call the Making Home Affordable help line. I hate to throw them under the bus but I have never called them before and was just looking for someone who might know the answer and it was all downhill and about 5 transfers and a disconnect from there.

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Permalink Reply by Laura Marshall on August 11, 2011 at 6:48pm

Thats great ! Mine was B of A / Fannie Mae. I submitted the HUD showing a credit from my commission going towards the judgement and they said no. They already said no to the seller contribution. They said if anyone wanted to contribute, it could not go HAFA. Maybe it is a Fannie Mae HAFA guideline? I don't know.

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Permalink Reply by Sue Irwin on August 11, 2011 at 8:14pm

The borrower can elect not to do HAFA and get paid, and sometimes there are good reasons. They must call to elect out of HAFA. I have not heard of HAFA funds being able to be used for closing costs or contributions, but I have a feeling the borrower can use it for whatever they like after close of escrow.

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Permalink Reply by Bryant Tutas on August 14, 2011 at 8:16am

In the news letter today

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Permalink Reply by joe beauchamp on August 14, 2011 at 10:45am

Ouch - it is very clear that the intent of HAFA, and in the directives, the seller cannot contribute to the sale. I think even a cursory examination of this one would be considered a HAFA violation. I'm sure that the intent was aimed at someone pressuring the seller to give his moving money to someone exactly as it happened here..

Jeff Payne said:

Brenda, I closed a HAFA with EMC and in the end we were short by about 800 and EMC let the seller use part of their $3000 toward the amount we were off.

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Permalink Reply by Kristen Hanson on August 14, 2011 at 11:53am

I had a BofA/Fannie Mae that was not a HAFA and they denied any contributions from any party. They said they changed their policy of allowing it. BofA said no so I went to Fannie Mae and they said the seller could contribute so I went back to BofA and they said I had to get it in writing from Fannie Mae then. When I went back to Fannie Mae and spoke with the same rep again she said the policy just changed the day before and now no one could contribute. She said it was a take it or leave it for the second which could only have 6% of the unpaid principle balance with a max of $6,000. I think they make up their "policies" as they go along :( .

Laura Marshall said:

Thats great ! Mine was B of A / Fannie Mae. I submitted the HUD showing a credit from my commission going towards the judgement and they said no. They already said no to the seller contribution. They said if anyone wanted to contribute, it could not go HAFA. Maybe it is a Fannie Mae HAFA guideline? I don't know.