HAFA Rule on 2nd lien holder pay out

The first is JP Morgan Chase they have approved a 6,000 payout.

The second PNC bank wants 10,000

The buyer is willing to raise the price to cover the 4,000.

Chase says HAFA rules don't allow more than 6,000. total

Any suggestions would be apprciated

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Permalink Reply by Enrique Vasquez-Plaza on August 25, 2011 at 1:07am

I had one like that. The second was DTA Solution and wanted 8200 and the first was EMC (chase) hafa and was granting the 6k. The second released an approval for 8200 and demanded the seller to make a single payment of 2200 to the second and after that they release the approval for 6000. The 2200 were paid by the buyer BTW. This buyer was killing for the deal.

Good luck.

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Permalink Reply by Becky Martin on August 25, 2011 at 9:06am

Yes, someone can pay it out of closing, I got one approval letter for the 6K for the closing and another demand request for the balance - owners usually don't have the money but I actually had one sellers' parent pay it since the buyer would not....

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Permalink Reply by Kathleen Couch on August 25, 2011 at 11:06am

Do not let the buyer raise the price. It will not have anything to do with covering the $4,000. What Chase says is compliant with HAFA. So, you have $4,000 to come up with in some way. Choices, cash from buyer, seller, agents. However, HAFA will not allow anything to be shown from the seller in the columns. After figuring where the money is coming from, the best way to handle it is to list to the side $4,000 POC to PNC. Do not put it in the figures on the HUD where the numbers are listed. Attorney's offices that have had short sale training, understand that way of listing it.

You are lucky the numbers are small relatively speaking. This happens all the time.

Hope it works out!

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Permalink Reply by Carol Pease on September 3, 2011 at 11:17pm

I don't know how you get around the HAFA rules. Nothing is supposed to be paid outside of closing and off the HUD. That would be fraud in my book. Run the other way.

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Permalink Reply by Jim West on September 4, 2011 at 5:12pm

Never raise the purchase price. HAFA rules dictate a max of $6,000. The buyer can pay it directly to the 2nd and it can be on the HUD. The 1st will not care. I have done it this way many times.