Ouch, SSS-Peeps,  learning the hard way on this point and thought I would pass along to you, in the event that this might be useful.

Have a seller that is HAFA approved.  Have SSA, et al, and all is good.  Got a buyer who offered near BPO, then responded to Servicer (BoA) counter offer up to BPO.  Valuation looks good and is approved.  Borrower is approved.  Property is approved.  Transaction is.....not.

See, Freddie Mac has a 9% cap on "Transaction Costs".  That was calculated assuming the national average of a 6% sales commission and 3% other closing costs.  This probably works well everywhere else but Illinois, because.......

Freddie Mac includes ad valorem real estate taxes, which are governmental lien on the property, as a "Transaction Cost".  (This, of course, doesn't make since, as the taxes are due one way or another, whether there is a transaction or not).  In the wonderful state of Illinois, we pay real estate taxes in arrears.  The taxes paid in 2011 are for 2010, 2012 for 2011, etc.  So at closing you as the seller must give the buyer a prorated amount of the real estate taxes for the year in which the closing occurs, because the taxes are not due (and the amount not ascertainable) until the year after closing.  Also, taxes run 8%-10% of the assessed value, or about 3% of the Fair Market Value as estimated by the county (this is always many thousands higher than what they sell for at short sale, if not tens of thousands).

So when you put these facts into the blender, what you find is that on a Freddie Mac HAFA short sale closing in December of any given year, the 9% cap will not fit the Commission, the closing costs and the taxes.  It will fit two of the three, but not all three.

This, of course, is not a problem for people in states where taxes are lower and/or paid periodically in the levy year.  So it appears that the burden of this little problem is unique to Illinois Freddie Mac borrowers.  I'm not racing out to file an Equal Protection suit on this transaction.  Just saying.

None of this would be a problem if all buyers were cash buyers with extra $$ lying around willing to add it to the transaction.  But I can't find that world to move to.  In this world we have FHA buyers who do not have an extra 3% of the sales price to put in.

If you are taking the HAFA approach to a short sale where the loan is owned by Freddie Mac, take a look at the numbers carefully up front.  Else, like us, you might find an otherwise completely approved deal wallowing.

Sigh.  I need a beer.