DULCIE CRAWFORD

The Treasury Department recently reviewed and eliminated some of the rules to make eligibility easier. Quite possibly, this is due to the fact that HAFA and HAMP have both lagged far behind in expected completions.

With the HAFA program being designed, in part, to catch and help those homeowners who fell out of the Home Affordable Modification Program, (HAMP), the program has had less than 1,000 short sales since its April 2010 launch.

Form a CNBC report, here’s the explanation from the Treasury Dept:

"While HAFA has been widely credited with streamlining the short sale process by setting clear timelines, documentation requirements and procedures, feedback from various stakeholders including servicers, housing counselors, realtors and others supported that additional enhancements could be made to further streamline short sale transactions, to the benefit of homeowners."

Among the Treasury’s changes are:

• HAFA no longer requires that servicers verify the borrowers finances.
• HAFA no longer requires servicers to determine if the borrowers monthly payment is higher than a 31 percent debt-to-income ratio.
• HAFA no longer requires second-lien holders to agree to accept 6 percent of the unpaid principal balance owed them, up to $6,000. Servicers now decide who gets paid how much, with a cap still at $6000.
• HAFA now requires borrowers seeking a short sale get an answer/agreement within 30 days.

Servicers are, however, still required to obtain a signed hardship affidavit.

The Treasury has also tried to address the issue of second-lien investors holding up the clearance of short sales. It changed how servicers pay out to these lien holders. Originally, the second-lien investor had to agree to accept 6% of the unpaid principle balance owed to them (up to $6,000). The new guidelines eliminate that 6% rule (but still keep the $6,000 cap). On behalf of the investors, servicers determine the percentage of the unpaid principal balance of the second lien to be paid to each holder.

HAFA was designed as a program with great intentions, but was stymied by bureaucratic red tape and oftentimes confusing or constantly changing guidelines. These new changes will hopefully make the program take off and help a lot more struggling homeowners. As an active real estate professional and member of the Greater Las Vegas Association of Realtors, I welcome these changes.

If you have any questions regarding short sales or anything related to real estate, please give us a call at 702.285.1990 or 702.588.6842. You can also email us at DulcieCrawford@gmail.com. We have provided plenty of information regarding short sales and other government programs here:http://www.dulciecrawford.com/ForSellers.php