HAFA Short Sales Explained

May 31, 2010 by  
Filed under Short Sales Stories

HAFA Makes Realtors HappyOn November 30, 2009, the U.S. Treasury issued new guidelines under the Making Home Affordable program to
create the Home Affordable Foreclosure Alternatives Program (HAFA). Those guideliens were modified March 26, 2010 and the HAFA program went into effect April 5, 2010. If HAFA is implemented widely, the Short Sale
process could completely change. The new program will reverse the Short Sale procedure
from the Realtor?s perspective.

Now, the Realtor and the seller take all the risk associated with Short Sales. They hope
the seller will qualify for a Short Sale and they hope they will get a sales price high enough to be acceptable to the lender. They will not find out until they receive an offer, sign the sales contract, submit it to the lender and get it reviewed by a loss mitigation negotiator. If the seller does not qualify or the sales price is not high enough, the Short Sale will not be approved, and all the time, money and effort are wasted.

With the new program, the seller?s financial qualification for a Short Sale is determined at the beginning of the
process. Also, the lender gets an idea of the market value of the home with an appraisal or Broker?s Price Opinion (BPO). The lender cannot charge the borrower/seller for this evaluation. Then, the lender lets the listing agent and the seller know what they will accept to pay off the loan, i.e. the net proceeds that the lender needs. The lender can express this amount as a specific amount in dollars, a percentage of the market value or as a percentage of the lender?s suggested list price. So, you will know how much you need from the sale of the property for the Short Sale to succeed.
The lender will also review the title to the property. While they are not obligated to do a title search, the lender will use their resources to find all the liens on the property. There are Short Sale listing agents who do not follow my procedure of doing a title search when I list a property, and they get surprised with other debts just before closing. Under HAFA, there should be fewer surprises.
In short, the essential features of the Short Sale are reviewed and approved at the time the listing is taken and all
of this goes into a Short Sale Agreement (SSA). The primary decision to be made after an offer is submitted to the lender is whether the proposed contract gives the lender the money they said they would take as full settlement.
The process creates standardized documents, so all the lenders will use the same forms. My staff will love this, because
every lender currently wants to use their own forms.

Some of the main forms are a Short Sale Agreement (SSA) used in conjunction with listing the property for sale and the Request for Approval of a Short Sale (RASS) used when an offer is submitted. The minimum amount of time allowed to sell a property under the HAFA Short Sale is 120 days, so listing agents have at least 120 days to get an offer. By the way, the lender cannot increase the amount they want to receive from the sale during this period. The Short Sale period may be extended by the lender for up to 12 months, so you have to get an offer within a year at most.

During the time that the Short Sale Agreement is in effect, the lender can start a foreclosure proceeding
and move it along toward a sale date, but the lender cannot complete a foreclosure. So, all those calls I have to
make to lenders reminding them to postpone the foreclosure sale while they are considering a Short Sale should not be necessary under these regulations.

The guidelines specify that the lender needs to respond to a proposed contract within 10 business days. Many Short
Sale Realtors look in wonder at that short time frame, as they are used to waiting for months. How is that possible? The
primary review to be made after the contract is submitted is whether the amount the bank receives is higher or lower than what they have agreed to accept. Under the current Short Sale review procedure, the loss mitigation negotiator goes through about 70 to 100 pages of Short Sale package, much of which is complicated financial information. Under the new program, the negotiator will look at the HUD-1 for the net proceeds and compare that number to their pre-approved number.

By the way, the servicer must consider the seller/borrower for a Short Sale under HAFA within 30 days of the seller failing to qualify for a loan modification, failing to comply with a loan modification or requesting that the servicer consider the seller for a Short Sale. So, the time limit for responding to the seller?s request to qualify the seller for a
Short Sale is only 30 days, considerably shorter than many lenders? time to review a Short Sale application.
Currently, there is a large battle over whether the lender will give the seller/borrower a full release from the entire obligation under the note. When the property was purchased, the borrower signed a note (promise to pay) and
a deed of trust (allows the property to be security for the loan). A Short Sale can close if the lender releases just the
deed of trust that secures the property. However, good real estate agents also want the seller to be fully released from
the entire obligation under the note, so the seller/borrower will not be hounded by collection efforts after the sale. Under the HAFA program, the lenders have to give the seller/borrower a full release from the obligation of the note, and the lenders cannot require the seller to sign a note to make additional payments after the sale closes. This requirement also applies to any mortgage insurer of the loan, so the seller walks away without any further obligation on this debt.

Another battle that rages with current Short Sales revolves around ?Commissionectomy,? where the lender tries to
cut the real estate agent?s commission in a short sighted effort to make more money on this one sale (and lose much more money when the agents will not do Short Sales with them again). Under the new program, the amount of the commission is agreed as a part of the Short Sale Agreement. The guidelines prohibit the lender from attempting to cut the commission after that. I enjoy the irony that the regulations say the maximum commission is 6 percent, so the government can fix a uniform commission for real estate agents even though the same government?s Justice Department engaged in extensive litigation against the real estate industry claiming that commissions where price fixing has occurred hurt the consumer.
The biggest battleground with current Short Sales occurs when there is more than one lien on the property. The
property can have multiple mortgages and other secured debts like judgment liens. The lender that is in first position
wants as much money as possible, and does not want the other lenders to get hardly any. The junior lenders want
as much as they can, typically at least 10 percent of the outstanding balance of the debt. The November guidelines provided that the junior lien holders will get an aggregate of $3,000 (with a maximum of 3 percent of the principal balance for any one lien). That provision was modified March 26, 2010 to double these numbers so that the junior lien holders can get 6% of their outstanding balance, up to a total of $6,000 for all the junior liens. In other words, if you have a second, third and fourth lien, the total paid to all three was going to be up to $3,000, now it is up to $6,000. I do not see this provision establishing peace between the lien holders. The junior lien holders may still want to get more money, as $6,000 may not be enough to settle a $100,000 second loan. In other words, the Realtors are still going to have to use the negotiating tools they have learned to get this battle settled. However, citing the HAFA regulations as a higher authority to convince a junior lien holder that $6,000 is reasonable will give real estate agents another tool in their tool box. If you want to learn negotiating tools for Short Sales, go to www.ShortSaleNegotiatingSpecialist.com .

There are financial benefits to the seller and the lender under the HAFA program. If the lender completes the Short
Sale, the loan servicer was going to receive $1,000 from the Treasury under the November guidelines. That amount has been increased by the March revison to $1,500. This helps a great deal with the servicer’s cost of processing the short sale, and may allow the servicer to outsource the short sale to a firm like Stewart Lender Services with the $1,500 covering most, or all, of the cost. If the first lien holder allows the second lien holder to receive $6,000, the Treasury will pay the investor who owns the note up to an additional $2,000, so this will help with the battle between the first and second lien holders. More specifically, the first lien holder gets one third of the amount allowed to the junior liens, up to a maximum of $2,000 under the terms of the March revision. The November guidelines originally allowed for only $1,000 using the same formula of one third of the amount paid to the junior lien holders.
Take a moment to consider what this means to lenders with a large portfolio of loans that need modification or Short Sales. For example, Bank of America acquired the Countrywide portfolio that has an abundance of this type of loan. Some of the loss mitigation negotiators tell me that they receive between 500 and 1,000 Short Sale applications per day. If only half of those applications were approved, that is $375,000 to $750,000 per day. In other words, we are
talking about someplace in the range of $19,500,000 per year for a five day work week. With that kind of income stream, Bank of America may be happy they bought Countrywide. How many loss mitigation negotiators could you hire if you were going to make that kind of money? Also, that money is not coming from a buyer who might change their mind or be unable to pay. It is coming from the Treasury who never runs out of funds. This provision of HAFA may be the most important, as it will allow lenders to staff up to handle the volume of Short Sales and decrease the time for a response.

Other financial incentives allow the seller to receive $3,000 from the sale as a moving allowance under the March revisions. The November guidelines only allowed $1,500. This will help the seller move to a new location after the sale closes, which helps with the problem that real estate agents have in getting people who have no money to move. These funds might also be available to help negotiate a settlement with junior lien holders, or pay items like homeowners association dues and property taxes that become sticking points in Short Sale negotiations.
By the way, the Short Sale Agreement will specify which closing costs and expenses the lender will allow, so the
listing agent will know whether there will be problems getting certain expenses paid, like back homeowners dues.
The draft HAFA regulations that I reviewed had a number of provisions requiring the seller/borrower to be delinquent in their payments, using language that specified that the borrower is in default on the obligations of the note. I sent many emails objecting to this requirement. American society is built on the idea that those who fulfill their obligations should be rewarded. This requirement punished people who worked hard to be sure they made their mortgage payments, even when they were in financial trouble. In some situations, there is a reason for requiring that
the seller/borrower be in default. For example, some of the agreements for Mortgage Backed Security (MBS) pools will
not allow a loan to be removed from that pool to start a Short Sale negotiation unless the borrower is delinquent in the
payments. Where this is a requirement, the borrower/seller will have to be made aware that they may have to hurt their credit even more by missing payments in order to qualify for a Short Sale.
For example, I was doing a Short Sale on a condominium in Raleigh, North Carolina where the investor was Fannie
Mae. Cartus, the servicer, would not proceed with the Short Sale until the borrower missed two payments, and then they would process the Short Sale. In other words, there would be many missed payments before the sale closed. I contacted Fannie Mae and the supervisors explained the MBS rule to me and said there were certain exceptions to these rules. My seller/borrower was recently married, just had a new baby, had other financial changes going on in his life where he did not want to harm his credit. With the cooperation of Cartus we were able to miss only one payment while they reviewed the Short Sale in advance of the missed payment. As soon as the payment was missed, the Short Sale was approved and the cash buyer closed the sale a few days later. In other words, it looked like the borrower had not made a payment in anticipation of the closing, something that frequently occurs when a payoff has been ordered by the escrow or closing attorney and making a payment confuses the payoff statement from the lender. Cartus took my suggestion and went out of their way to find a solution that complied with the MBS requirements and caused the least damage to the seller/borrower.
In general, the new HAFA regulations do not have a blanket requirement that the borrower/seller be in default.
The regulations state that the borrower is delinquent or default is reasonably foreseeable. There are some minor vestiges of that idea that were not taken out, such as a phrase that says the lender may terminate the Short Sale review if the borrower brings the loan payments current. I object to the idea that a borrower could lose the Short Sale by working hard and making the payments. However, the provision is at the discretion of the lender, and I doubt that any lender would stop a Short Sale in process with a financially troubled homeowner just because they made the payments.

Real estate agents will love some of the provisions of these regulations. The property has to be listed with a licensed
agent who regularly sells in the area where the property is located. I believe this leaves out Redfin and similar firms that do not have a presence in the local area. The seller has to keep the property in marketable condition, so I will not
have to be turning on the utilities at some of my Short Sales in my name. The seller has to cooperate in the marketing
effort and respond to requests by the agent and the lender, so no more uncooperative sellers. Also, the Short Sale Agreement must give the buyer at least 45 days to close the sale, so real estate agents will not get an approval after months of waiting that says the buyer has to close in less time than anyone can get financing.
I enjoyed reading the part of the regulations that says the servicers must have adequate staff to comply with the
time limits of HAFA. Telling a borrower that they have the right to a Short Sale within 14 days of a determination on the loan modification, responding to a proposal to do a Short Sale with a Short Sale Agreement in 30 days and reacting to an offer within 10 business days will require major staffing increases by some lenders. The lenders are required to report how they are complying with HAFA to Fannie Mae. Also, Freddie Mac audits the lenders to enforce its provisions.

Just like in any Short Sale, the transaction must be a good faith, arms-length sale. The seller cannot buy back the house after the sale, so those plans to sell to a cousin and buy it back will not work. In most situations, the seller will not be allowed to rent the home from the new buyer, unless that is allowed by the investor?s guidelines. One additional requirement is that the buyer may not sell the property for 90 days. This will cut off a number of ?internet gurus? who tell people they can make fortunes flipping Short Sales. Similarly, the seller cannot receive any of the sale proceeds (other than the $3,000 relocation assistance) and cannot receive any of the commission. So, real estate agents who have been getting Short Sale listings by giving some of their commission to the seller will have problems.
The regulations specify that reporting a Short Sale to the credit bureaus requires a special comment, and the regulations give an example of reporting the Short Sale as ?account paid in full for less than the full balance?. There will be trouble for agents who try to get Short Sale listings by promising that there will be no reporting to the credit bureaus, or that they can avoid any adverse effect on the seller?s credit.
Are these new regulations the Godsend for Short Sale real estate agents? No, there are a large number of Short
Sales that are not covered by HAFA. First, they do not apply to loans owned or guaranteed by Fannie Mae or Freddie
Mac, which is a huge exception to the rules. However, at the National Association of Realtors convention in 2009, Fannie Mae executives announced a pilot program to study new Short Sale procedures that had some provisions that are similar to HAFA.
The November draft of the regulations said HAFA Short Sales were allowed only on loans that have gone through the Home Affordable Modification Program (HAMP). That provison was changed in the March revision, as any borrower can request a HAFA short sale. However, the borrower must meet qualifications that are similar to the HAMP program. In other words, the loan must be on the borrower?s principal residence, so it does not apply to investment
properties. The regulations also limit HAFA to loans where the outstanding principal balance is $729,750 or less (so that leaves out most luxury properties and many of the loans in states like California). With the November verions of the regulations, the homeowner must have tried to do a loan modification under the HAMP regulations. So, if
someone just lost their job so that they do not have a prayer of qualifying for a modification, do they have to go through that procedure? Not under the March revision to the guidelines.

It does make some sense to couple the HAFA Short Sale with a HAMP modification, because the seller will have furnished the lender with the same financial information. However, some real estate agents may find the difference between modification and Short Sales interesting. When the borrowers are applying for a loan modification, they are trying to show financial strength to convince the lender that they can make the payments if they are modified. When the borrowers are applying for a Short Sale, they are trying to show financial weakness to convince the lender that they cannot make the payments and foreclosure is the other alternative.
The Short Sale Agreement may specify that the borrower/seller must make mortgage payments during the Short Sale period, but those payments cannot exceed 31 percent of the borrower?s gross monthly income. However, it is not mandatory that the agreement have a payment provision, and the forbearance of loan payments is specifically

These regulations went into effect April 5, 2010, so lenders who participate in HAMP will have to have their procedures in place and their staff trained by then. If you want an extensive analysis of the HAFA program, I did a 90 minute webinar for the Council of Residential Specialists (CRS) of the National Association of Realtors that you can view by going to http://www.crs.com/Education/287?cid=W027R . Actually, it was supposed to be 60 mintues to start, CRS said I had so much good information that they stretched it to 90 minutes, and it actually ran close to two hours because the 480 people who signed up for it participated so much at the end of the session that CRS kept it going.

These regulations for the Home Affordable Foreclosure Alternatives program are a huge step in the right direction because they change the process to be more rational. Most of the Short Sale decisions are made at the time the sales process starts. Then, the review is expedited so buyers do not have to wait for months to hear whether they bought a home. Then, there are financial incentives that compensate the servicer, the loan investor and the seller to make the process more financially viable. Finally, there will be no more ?Commissionectomy? so Realtors will not be financially prevented from doing Short Sales.

I hope these ideas spread like wildfire.


21 Responses to “HAFA Short Sales Explained”
  1. Hi Tim – Took your webinar class on HAFA through the CRS site – Your’s was one of the best short sale courses I have taken. With numerous designations, and all the “Short Sale Instructors” out there – your teaching technique and obvious experience with short sales simplified the HAFA program for me. Received an email you will be teaching another through the CRS site – I will be there.
    My husband and I are taking a 6 hour class at the Phoenix Association of Realtors on Monday on FNMA and FDMAC HAFA.
    As a “seasoned agent” it is imperative in this market to keep up – it has changed for all time, I believe.
    Thanks for sharing your experiences!
    Terry Parrish, Assoicate Broker
    West USA Realty – Phoenix, AZ

  2. Gregory Williams says:

    I work for a law firm. We sometime negotiate short sales for clients. Are we permitted to collect a fee on the HUD-1?

  3. Joe Beauchamp says:

    Tried sending a contact message through this site – still sitting there – would like to put this out on a forum, or have you do it, under the HAFA section because I think it nicely explains things simply that I have been trying to nail down. I think it would be helpful to other agents. Will be getting your recording, too.

  4. Whats up ! Love your blog thanks for sharing it with us.. Greetings from the Speedy DNS.

  5. I was reading about your topic, “HAFA Short Sales Explained | Real Estate Short Sales” at one of the other blogs I retain in my site reader. You happen to be pretty much in agreement with each other. It is just not what I imagined, nonetheless I’m recognizing now that I’m quite possibly wrong… enlightening..

  6. Amber says:

    Hi, Tim! First and foremost, I wholeheartedly thank you – yours has been the first explanation of HAFA I’ve found that actually visits the whole “60-day delinquency” demand.

    I’m so in need of your help. We’re in the midst of a Freddie Mac HAFA shortsale, and I can see the 60-day delinquency demand looming in the near future. We have never been delinquent, but my husband has been relocated for work over 3 hours away, we have another child on the way, and delinquency is eminent. We’re making every attempt to stay current and transition from our home before delinquency is an issue. Can you offer any knowledge or advice on proceeding with a HAFA shortsale without being delinquent?

    Thank you, thank you, thank you!

    • Tim Burrell says:

      You can always do a conventional short sale if you do not comply with the HAFA requirements. You mention you are in the middle of a short sale, so keep on going with processing it as a conventional short sale. The same requirement of delinquency crops up with FHA and some Fannie Mae short sales. Fannie Mae has decided that the point at which you have to be delinquent is when they approve the short sale. Contact the company servicing your loan and see if they will apply the same logic, because you might have to be delinquent, but if you can be delinquent for the least amount of time you will do the least damage to your credit.

      • Amber says:

        Thanks so much, Tim! I agree completely, and really feel we’d have more negotiating power opting out of HAFA entirely. …And as long as Chase remains true to the Freddie Mac servicing guidelines, I think we may be able to bypass the delinquency issue displaying that we’ve been relocated due to work and are unable to afford a second residence. Here’s hoping! Wish us good thoughts, Tim =)

        Thanks again – and Happy Friday!

  7. Anna says:

    Tim! I am in desperate need of some help and advice. With no plans to move, the house across the street from our current home went on the market in May. We submitted a contract for the full asking price, secured our financing, put our home on the market and waited. Weeks later we discovered we were in the midst of a short-sale. In the meantime we accepted a contract on our home. 2.5 weeks before closing, the sellers agent called me requesting an additional 29,000 to be paid to the 2nd mortgage company at closing, independent from the HUD1. Apparently the first mortgage company, Chase would only allow 6,000 to the 2nd, so we would have to to a side transaction to make it work. She also stated we would rewrite the contract for 231,000. Our closing atty advised to NOT do anything outside of closing.
    My frustration is that only 216,000 is owed to the first company. Why would they want to limit the amount the 2nd receives if they have nothing else to loose. We have even offered to increase, not decrease the sales price to avoid any shades of gray. This offer too was declined stating Chase/Freddie Mac would still only allow 6000 to MTG2.

    Our home of 9 years is sold, we have a child starting elementary school in 3 weeks, and we are feeling forced to participate in what feels to be an illegal transaction. please advise. is what we are being told about freddie macs limits true!!

    Thank you,
    Anna B.

    • Tim Burrell says:

      It may be that the short sale of the first is a HAFA short sale, which limits the amount of payment to the second to $6,000. If so, see if you can change to a non-HAFA short sale on the first loan with Chase, but you may still find that Chase wants the money instead of letting it go to the second. Another solution is to call the secondary marketing department of the second lender and buy the note. Banks buy and sell notes all the time. If you, or someone who is helping you, buys the note, then you have control over what will be accepted as the payoff of the short sale (and most second loans are held by the lender instead of being in a securitized pool that makes them almost impossible to buy only one loan). If you buy the note before closing, the payment on the second loan goes to you as the owner of the note. The value of the note depends on its present value and that value is affected by the risk and difficulty of collecting it. If the first loan has started foreclosure proceedings, the value of the second note goes down. The department that sells notes is independent of the loss mitigation department (who may tell you that they do not sell notes, but that is not true, so talk to the right people instead of loss mitigation). Another choice is to see if the seller can make some contribution and have them pay the second before the closing. There is nothing wrong with a seller who owes on a note making a payment on the note before closing to decrease the amount owed, then the second gets the $6,000 at closing. If there is any advantage for you to rent the property before the closing, you can move in and have the seller collect the rent then have the seller pay down the second loan using the rent money. The rental has to be a reasonable price and a ligitimate transaction i.e. $29,000 for one day does not pass the smell test. If you are inclined to pay the $29,000, ask your closing attorney if there is any problem with your agent paying that amount on the HUD (it shows up in the line 700 area). If it is a HAFA short sale, there may be issues with the agent contributing, so you many have to change to non-HAFA short sale. Then, you enter into a buyer’s agency agreement with your agent to pay them whatever is necessary as a commission, and buyer’s agency commissions are shown on your side of the HUD i.e. all the payments are on the HUD so nothing is done outside of closing. The other choice is to go back to the second again and try to get them to be more reasonable i.e. do an homage to Nancy Regan and just say no to see if they will back down. Another choice is to ask the agent who sold your house why you did not have a contingency for closing on the purchase of this house, and see if they will contribute to the solution of this problem. All of these ideas depend on compliance with your local laws, so consult your closing attorney to be sure that there is no violation of any regulation before you go forward. Your other choice is to call me to discuss this in more detail, you will find me at http://www.TeamForYOUrDreams.com as I have a consulting service to solve short sale problems. Good luck.

  8. Mary S. says:

    Tim, I am currently in the process of qualifying for the HAFA short Sale program. I was told by Bank of America that I cannot list my home for sale until I am approved for the program. They claim they need to have an appraisal or Broker?s Price Opinion to determine the list price FIRST. Once they recieve the list price, then and only then, can I list the property. Bank of America told me the approval process will take 6-8 weeks. This is a long time to have to wait before I can list the home (assuming I’ll qualify for the program). The agent that I’ll be working with claims to have done many HAFA short sales and he didn’t have to wait for a list price from the lender in order to list the home.

    Is the lender correct? If so, how is it that this agent was able to list so many homes prior to the HAFA short sale approval?

    Thank you,

    • Tim Burrell says:

      There are two ways to do it, and I usually agree with your Realtor. The first way is to wait for the price that Bank of America will accept, list the property accordingly, get an offer where you know that the sales price will work and get the HAFA approval quickly. In a perfect world, that is a good experience because the buyer has a short time to wait for approval and you know it will be approved. The problem is the time it takes to get the HAFA approval, which brings up the second way. Just put it on the market, get an offer and submit an Alternative Request for Approval of Short Sale, the one you use when you do not have the HAFA approval in your hands. Your Realtor knows what the market is and knows what a reasonable price is, so go out and get the job done. The problem with waiting for the HAFA approval is the foreclosure department at Bank of America does not coordinate with the other departments. So, if you are behind on your payments, they will foreclose. I heard from a friend in Chicago about a seller who was assured they would get the Bank of America HAFA approval, but it took so long the property went to the brink of the foreclosure sale and the seller had to file bankruptcy to stop the sale. Once the HAFA short sale agreement is signed it stops the foreclosure for 120 days, but in the Chicago case they had not reached a written agreement. So when the people at Bank of America ask for you to wait, ask for them to put in writing that they will not foreclose on you or cause you any other problems while they are delaying your sale. When they won’t do that, document the conversation, put the property on the market and get it sold.

  9. Aar Bee says:

    I had written an offer on a short sale which has been approved by first lender, Chase. It is applied under HAFA. Chase gave us 30 days to close. Just today after this approval case the sellers agent found that the second lender, Bank of America which held the second loan, has sold the loan to a collection agency by mistake and now the sellers agent has to submit documents to the collection agency so that they return the loan documents to BofA and short sale goes through..
    Questions are:
    1. Is it normal to have these kind of instances in HAFA as well?
    2. What the worst case scenario in this case. Is it possible I may not get this house? what is that scenario?
    3. How long can this clarification to the second loan holder, BofA take and shall we be able to close within the time given by chase? What happens if we can’t close by the date given by first lender, chase.

    As per my agent since it is HAFA sale, second lender has already agreed, otherwise we would not have got the approval. As per him it is just a matter of time and there are 98% chances that we will get this house. That makes me feel better. What are your views on this situation?


    • Tim Burrell says:

      Dealing with a collection agency normally has an advantage of being quick because they typically respond fast if they bought the loan. If they are hired to collect the loan, it is just an agent of Bank of America and they follow Bank of America rules. The worst case scenario is that the second lender asks for more than what is allowed under HAFA, which is a total of $6,000 and refuses to be reasonable. In that situation, you can switch from a HAFA short sale to a regular short sale and see if you can work it out. How long will it take? Hopefully the collection agency bought the loan and is looking for a quick return. I have had compete decisions by collection agencies in less than a week. If you cannot get an answer quickly enough, go back to Chase and get an extension on the time limit for closing the short sale. So long as you are ready to close, they will usually extend it. Good luck. Tim

      • Aar Bee says:

        Thanks a lot for the answer.

        last Friday, within two weeks we came to know that collection department, which is a division of BofA (As per my understanding of what the agent told me), has assigned a negotiator. He will provide his findings this week. As per my agent, in order to get to this stage several sets of eyes have to go over it for a host of reasons. As per him this is the last stop on the train from here.

        I am hopeful now!

        And yes, we will have to get an extension from chase. They gave us 10/14/2011 as closing date!

  10. Janet says:

    In order to qualify for the HAFA program, is it true that the seller cannot have any W-2 income?

    • Tim Burrell says:

      No. You can be employed, and you can even be current on your mortgage payments (as long as you are in imminent danger of defaulting on the payment). There are three flavors of HAFA: the regular one, the Fannie Mae one and the Freddie Mac one, so check the rules for each when you are considering a HAFA short sale.

  11. Judy Smith says:

    We are trying to buy a short sale house in which the seller is using the HAFA program. We have asked the seller to repair some structural damage before we buy the house, and he has said that he is not allowed to do any repair per HAFA. Is this the case?

    • Tim Burrell says:

      It used to be, and with some lenders it still is because the lender has not adopted the new rules for HAFA. HAFA now allows the seller to use some of the $3,000 in relocation assistance to do repairs, particularly if they are required by the buyer’s lender. However, there are some lenders whose regulations have not been updated to comply with this revision. So, if the lender considering the short sale still has that prohibition in their guidelines, you may be stuck. Find out who the lender is and check on their compliance with the new revisions. Since you are in the military, I bet you know a lot about regulations that restrict what can be accomplished. Good luck.

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