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Permalink Reply by Smitty on February 4, 2012 at 11:03am

I am no fan of HAFA at all.  To me it's a joke. NON-GSE HAFA = The biggest benefit is the seller can receive $3000 for moving expenses, and a full deficiency release on their FIRST MORTGAGE.  You can get those same things in a traditional short sale and not have to go through the hassle.  The LENDER sets the sale price and from what I've seen it seems to ALWAYS be grossly overpriced almost dooming your sale from the start.

They will pay out a MAX of $6000 to a second lien holder.  Excellent if you have a second that will take 10% of the loan balance and it's under $60,000, but it can kill your deal if you have a second lien holder and possibly $80,000+ in liens.  Oh and second lien holders, DON'T have to participate so even though they may release their lien, they MAY retain their deficiency rights..So what's the point of doing HAFA?

The biggest reason that I don't like it is servicers can change ANYTHING they want about the program based on investor requirements, i.e., they can change anything they want and guess what?  IT'S ALLOWED!!

HAFA was created by the lenders to protect the lenders...not homeowners.

If it's HAFA approved that means they have already done a BPO and came up with a value for the property.  I have to find it but there was a statistic out I think in the fall last year that a little over 8000 HAFA short sales have been granted and mind you that number was mixed in with Deed in Lieus, which I find it fascinating they didn't break out the DIL number from the short sale number.  There were WELL OVER 100,000 traditional short sales approved last year.

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Permalink Reply by Brian Avery on February 4, 2012 at 1:41pm

I used to not really like HAFA, but lenders are getting better with this program .As a seller the only main difference (I am in CA) is the $3000 relocation assistance. At least in my experience I have never seen a HAFA approval with a promissory note or cash contribution requirement, which I might see on a traditional short sale. HAFA or NON-HAFA are just different buckets. Smitty makes some valid points, except "The LENDER sets the sale price "  is not correct.

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Permalink Reply by Smitty on February 4, 2012 at 2:57pm

It depends on where you are in the process.  If you already have a property listed with an offer, NO, the lender doesn't set the price, but YES they do set the list price if you haven't started the process.  That is a HAFA APPROVED sale.

"How Does a Short Sale Work?

• Pre-Sale—The enclosed Agreement provides a list price for your Property, as well as the sales costs (broker commissions and closing costs) that may be deducted from the final sales price.  You must list your Property (like any home sale) with a local real estate broker at the approved price. "
  
  https://www.efanniemae.com/sf/formsdocs/forms/doc/servicingtrans/18...

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Permalink Reply by Eric Mieles on February 5, 2012 at 9:52am

Both of you guys are right. The key is really doing a discovery and letting the homeowner know the good and possibly not so good points about HAFA.

If during your discovery you find out it's a GSE and you would have Togo "pre approved HAFA" I agree with Smitty as why set yourself up for value disputes. On the other hand private investors and an arass HAFA is useful at times and has really improved recently. BOA made some internal changes where they handle it in house instead of sending off to a work group.

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Permalink Reply by Eddie Kearns on February 5, 2012 at 12:46pm

I was informed, by a reliable source, that HAFA APPROVED short sales will require that I hold the property for 90 days before selling. Any experience to this statement?

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Permalink Reply by Smitty on February 5, 2012 at 3:54pm

Any HAFA short sale has a no-resale clause - Can't resell for 90 days.

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Permalink Reply by Eddie Kearns on February 7, 2012 at 11:56am

So the advantage to the homeowner is if they sell thru a HAFA program, they're going to get 3k to move, and there's no deficiency on the 1st mortgage, correct? There's no deficiency on the 1st in my state anyway (NC).

The disadvantage is that they are "pre-approved" for usually a price that's too high, and investors like me can't buy them unless they are willing to wait 90 days to sell them?

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Permalink Reply by Brian Avery on February 7, 2012 at 12:01pm

You do not have to use the "pre-approved" program with HAFA.Generally you would submit like a traditional short sale.  Also typically with HAFA you will not have an issue with them asking for a contribution or promissory note as well. 

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