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Dedicated to bringing homeowners across the nation the latest news on short sales, we’ve discovered new information on the Home Affordable Foreclosure Alternatives program (HAFA) for 2013. Let’s explore the updates on HAFA’s success for 2012, what these new policies are for 2013, and when they will be in effect.

For those who do not know what HAFA is, it is a short sale program that is a part of the Making Homes Affordable (MHA) program run by our Government. Their success has been increasing with the latest data showing completed short sales for October at 38,518 which is a 13% increase from September. New and improved policy changes continue to incentivize lenders and homeowners to complete short sales through HAFA.

What Are These New Policy Changes?

Data provided from dsnews.com

Here are some of the significant updates:

• The decision on a borrower’s request for a short sale must be made by the servicers within 30 days as opposed to the previous 45 day policy.
• Introduction of the “pre-determined hardship.” If the borrower is delinquent on payment 90 days or more and has a FICO score less than 620 (probable if 90 days late), then they are considered to have a pre-determined hardship. However, they still need to execute a hardship affidavit prior to closing the sale. Lenders will not have to further validate the hardship.
• HAFA provides short sales for non-delinquent borrowers who own non-owner occupied properties and offer relocation assistance to the tenants who are occupying the space at the time. This is an old but modified policy.
• Another change involves the solidification of the sale to be an “arms-length” transaction. This means no money between the buyer and seller is given or received without it being reflected on the HUD 1 Settlement statement.
• Treasury increased reimbursement amounts to up to $5000 (increase from $2000 previous) to primary mortgage investors for payments to the subordinate lienholders.
• Fraud prevention is increased by stating a resale of a HAFA short sale cannot be made 30 days after closing. Also, HAFA short sale resale’s of more than 120 percent are not allowed if they occur between 31 and 90 days after closing.
• Certain HAFA documents are now optional such as the SSA, DIL agreement, Request for Approval of Short Sale (RASS), and Alternative Request for Approval of Short Sale (Alt RASS).

When will these updated policies go into effect?

The HAFA policy updates are set to be in effect February 1, 2013 but changes may be implemented earlier by servicers.

Hope this helps!

Peter