Hello Standard Short Sale Home Affordable Foreclosure Alternatives (a.k.a. HAFA II)!
Today is the first day of the new HAFA II program from Fannie Mae & Freddie Mac. This new program expands eligibility requirements for Short Sales, and will hopefully speed up the process of getting lender approval.
The biggest change in this new incarnation of HAFA is that now Fannie and Freddie will allow borrowers who are still current on their mortgage payments (and live in the property as their primary residence) to be considered for a HAFA Short Sale. Previously, borrowers needed to be in default before qualifying for HAFA.
Other changes include a new, more efficient process for borrowers who are in default with a severe financial hardship, a more streamlined approval process, and automatic qualification for military service members being transferred.
There are several advantages to being in a HAFA Short Sale program:
However … I think the new HAFA stance on subordinate lienholders is a double-edged sword. Although HAFA allows up to $6,000 to go to junior lienholders, in exchange they require the lien to be released and deficiency waived. This means that a junior lienholder can still choose not to accept that money and seek a cash contribution from the borrower in the Short Sale and/or pursue deficiency later. This new requirement may disincentivize a large junior lienholder from accepting HAFA and may kill the deal for everyone.