The HAFA Short Sale Program in New Jersery was introduced in 2009 by the United States Treasure Department as a way of delivering alternative options to homeowners who are facing financial problems in relation to their home mortgages. The HAFA (Home Affordable Foreclosure Alternatives) program was meant to be implemented through the existing HAMP (Home Affordable Modification Program) from April 5, 2010 up to the end of the year 2012.

The HAFA program essentially was designed to provide homeowners with specific incentives in relation to the execution of a short sale or a DIL (Deed-In-Lieu) of foreclosure. The intention was to help homeowners avoid foreclosure based on a loan that is eligible for modification under the original HAMP program. The United States government assures that all servicers that have participated in the HAMP will be required to comply with the specifics of the HAFA. Here are some reasons to use the HAFA Short Sale Program.

1. Excellent complement to HAMP.

The drafting of the HAFA Short Sale Program provides homeowners with an excellent complementary program that presents a viable alternative to the borrowers who are eligible for HAMP, but do not have the resources to keep their homes. Moreover, the program recognizes all the eligibilities specified under HAMP like the inclusion only of personal residences.

The HAFA also allows only mortgages that do not exceed $729,750 with the borrowers required to exhibit that they are suffering hardships like the loss of income, unexpected increase in expenses, and increased payment of mortgage among others. If your mortgage originated prior to January 1, 2009, then you can definitely avail of the program with the PTI payment greater than 31% of the gross monthly income of the homeowner.

2. Homeowner information has been previously collected.

When looking at the HAFA option, homeowners no longer have to exert additional resources and effort in providing the necessary financial and hardship information that is required from them. The reason is that all of the information has already been previously collected in relation with the consideration for a loan modification application primarily under the HAMP program.

This means that the entire process associated with the application of homeowners can be tackled in relatively faster time. It also means that homeowners who are strapped for valuable cash do not have to contend with additional expenses in terms of preparation of documentary requirements needed by servicers for processing.

3. More flexibility in receiving terms.

One of the most vital reasons to consider with the HAFA Short Sale Program in New Jersey is that it allows homeowners to actually receive pre-approved short sales terms. This means that the homeowners who want to avoid foreclosure on their property can accept those terms even prior to the listing of the property to make it available in the market. The normal practice with short sales is that offers are only considered once the property has been included in the listing.

With the HAFA program, even offers that qualify as minimum acceptable net proceeds can be considered prior to the listing. In a sense, this gives the financially challenged homeowners with more flexibility on the options that they have on the table. This also means that they can at least be assured that there are already viable offers even before the property hits the market, which in a way helps to calm their nerves.

4. Future liabilities of homeowners are automatically forgiven.

Real estate agents who are experienced in handling short sales can tell you that there are some servicers who require homeowners to shoulder a portion of the balance after the short sale has been completed. This means that the homeowner will still have some amount of debt to contend with in the future. With the HAFA Short Sale Program, this type of practice is not tolerated.

With the implementation of HAFA as a complement to HAMP, the homeowner is completely released from any future liabilities. It is important to note that the release is based on the first mortgage debt only and does not apply to subsequent mortgages. What this translates to is that no deficiency judgment, cash contribution, or promissory note will be required from the homeowner, making them completely debt free after completion of the short sale process.

5. Homeowners receive incentives.

For majority of homeowners who are facing extreme financial challenges aside from the problem of keeping up with their mortgage payments, the HAFA Short Sale Program is a welcome relief. One of the most compelling reasons to use this program is that it delivers financial incentives to the homeowners while subscribing to standard processes, timeframes, documentary requirements, and deadlines.

It is important to keep in mind though that to maximize these benefits, the assistance of competent real estate agents or experienced real estate companies may be needed. Under the HAFA program, a borrower relocation assistance equivalent to $3,000 will be paid to the homeowner. The servicers will receive $1,500 to cover their processing and administrative costs.

Investors on the other hand can get up to $2,000 based on maximum short sale proceeds of $6,000 that will be distributed to subordinate lien holders. The HAFA program requires that a one-for-three matching should be established.

6. Lenders waive certain rights.

Based on the particulars of the HAFA program, lenders that are participating should agree to waive their rights to deficiency judgment. Any experienced real estate agent will tell you that deficiency judgments have a tendency to suddenly popup right after short sales or foreclosures. This is normally attributed to the fact that many sellers do not get tax or legal advice ahead of time.

The deficiency judgment can come as a surprise to some and is considered as a relatively complicated process to comprehend. This emphasizes more the need to have an experienced real estate agent or company backing up homeowners so that they can understand the intricacies of such a complicated process. Homeowners in California should be aware that some residential units are exempt from the execution of deficiency judgments.

With all these beneficial reasons available to distressed homeowners, the use of the HAFA Short Sale Program becomes a legitimate alternative solution.