Wednesday, January 25, 2012

Is HAFA Short Sale Program Right for You

The economic downturn that has affected the real estate market in the United States can no longer be described as gloomy. The word is not enough to describe the worst thing that has hit the housing industry in the country. Distressing can be the apt word for the long-running real estate economic meltdown that hit the states. In 2009 alone, a record high of 2.8 million homeowners had to face foreclosure. And in the following year, the statistics of an estimated 3.5 million homeowners facing foreclosure proved to be a tale-tale sign that the housing mess will remain for some time. Real estate experts even say that the downturn can last until 2012.

There are many options by which homeowners can avoid a foreclosure but one of the best options to choose now is the short sale. Traditional short sale transactions however, tend to be too slow for homeowners to avoid an impending foreclosure. And this is the reason why the Obama administration introduced the Home Affordable Foreclosure Alternatives. In the HAFA program, homeowners are supported to go with a short sale in order to avoid a foreclosure.

If you are one of those homeowners who are near or facing foreclosure on your home, you should first ask if the HAFA short sale program is right for you.  Here are the basics of the HAFA short sale program to help you discern if it can assist you in avoiding an impending foreclosure of your home.

What is the Goal of HAFA Short Sale Program

Since the real estate economic meltdown has struck the housing industry and is expected to be the prevailing atmosphere in the years to come, the HAFA short sale program is designed to help homeowners settle their mortgage debt and at the same time avoid foreclosure of their homes in the process.

Nowadays, it is not a rare case for the amount of the mortgage debt to be greater than the value of your home. And in this instance, the HAFA short sale can be helpful of erasing your mortgage debt without going through the process of foreclosure. Applying to get included in the HAFA program is the best option if the homeowner is also not eligible for any other home loan assistance programs such as a loan modification.

Eligibility for HAFA Program

In order to earn eligibility to the HAFA short sale program, there are five criteria that homeowners who are facing an inevitable foreclosure must meet.

These are:
1.       The house should be the principal personal residence of the homeowner. Exception to this rule is if the property has been vacant for a long time or has been rented out less than a year. The homeowner should also not have bought any property to be his principal residence during these times.
2.       The mortgage loan amount should not exceed $729,750 if it is 1 unit. For more than 1 unit, here is the amount bracketing for the amount of mortgage loan covered by HAFA.
·         $934,200 = 2 units
·         $1,129,250 = 3 units
·         $1,403,400 = 4 units
3.       The homeowner should show proof of hardship like loss of job, loss or decrease of income stream, unexpected increase in expenses due to emergency medical allocation or the likes, or an increase in mortgage loan payment
4.       The first mortgage should have originated before January 1, 2009
5.       If the mortgage loan payment is more than 31% of the borrower’s monthly income
It must be noted by the homeowner applying for eligibility to the HAFA short sale program to pass all these criteria. A negative answer to any of these criteria can mean failure to qualify to the program.

Eligibility Issue

So what should the homeowner do when he does not pass the criteria set by HAFA. The best strategy in this case is to find and hire a short sale agent. Actually, this option or strategy is what HAFA is recommending to all homeowners who failed to pass their screening process. Short sale agents are known to be an expert in terms of short selling a house. More than that, they know the intricacies of any US-government sponsored housing program that can best suit and meet the needs of homeowners.

What if You are Current with Your Mortgage Payments

Another issue that can affect your eligibility for HAFA is if you are current with your mortgage payments. How can you be eligible for HAFA when there is basically no hardship situation showing on your loan payments history? This can be resolved by calling up your lender or insuring company. You will need their approval in order to short sale your house using the HAFA short sale program.

According to real estate experts, the housing economic meltdown will continue for some time. And during this prevailing housing mess, homeowners who are having a hard time paying their mortgage loan will face foreclosure with great possibility. The trend now is to find a leeway that can solve a foreclosure. Homeowners are likely to search and find ways to prevent this since a foreclosure of their homes besides the obvious result of losing a home can give their credit record a major blemish for at least the next ten years.

Homeowners who cannot avoid a foreclosure of their home should be wise to opt for a permanent solution to their mortgage loan problems. And one of the best solutions that they can avail is the short sale. The only thing they have to do now is to find out whether they can qualify for the government-sponsored housing program or seek a qualified short sale agent that can help them face foreclosure.