Big Changes Coming to HAFA

It was announced on March 9, 2012 that the Home Affordable Foreclosure Alternative (HAFA) program was extended until the end of 2013.  Along with this extension come several huge changes that will benefit homeowners and allow for more participation in this program.

 

  • Occupancy Guidelines Waived
  • $3000 to seller even if tenant occupied
  • Up to $8500 to subordinate lien
  • Qualify even if current on payment
  • Credit reported as Paid in Full
Please note that I have not officially verified this information.  www.makinghomeaffordable.gov has not been updated to include this information.  I received this news from Alex Charfen of CDPE.

Let’s elaborate on these changes.

The first 2 changes mean that…
non-owner occupied sellers can now participate in HAFA and receive all of its benefits.  The $3000 incentive and the waiver of deficiency.  It’s important to note that there is still a tax issue for a deficiency waiver on an investment property.  See you CPA.  This change also removes the 12 month limit on when an owner occupied could have already relocated.  Previously, if you had moved out of your residence over 12 months prior, you were not eligible.
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2nd lien holders can now receive up to $8500 dollars to release their lien and waive deficiency.  I am not clear if the percentage has changed or just the capped dollar amount.  This would generally benefit short sales on higher priced homes if the percentage cap was still 6%.

Now for the 2 game changers…

You can be current on your payments and still qualify for HAFA.  This is a huge breakthrough for someone that is facing the need to sell but hasn’t gone as far as missing their payments.  I think this will go along way to preventing strategic defaults and extend a helping hand to several homeowners who find themselves “stuck” in their underwater home.
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Credit Bureau Status Code 13 and 65
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This will be a huge benefit to those who want to preserve their credit status.  These two credit codes are how the participating lenders will report the status of your account to eh credit agencies. Status Code 13 means paid or closed account/ zero balance.
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Clean. Paid. Closed.
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Just like any other closed account in good standing.
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Similarly, Status Code 65 will show the same except with a notation that foreclosure proceedings were started if that were the case.
As with any of the information provided here, you will want to speak to the appropriate attorney or CPA when dealing with short sales and their legal and financial impact.
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We are very excited by the changes to HAFA.  They will allow for us to help a wide variety of homeowners navigate through this challenging time.  The ability to sell your home on a short sale with no negative impact to your credit is truly a dream come true.  Let’s hope these changes are true and that they are implemented immediately.

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