The Home Affordable Foreclosure Alternative or HAFA Program is only one of the solutions offered through Making Home Affordable or MHA offered by the Treasury Department. Many of us in the Real Estate Profession know the difference and understand these differences. However, where much of the confusion seems to stem from is the fact that the information is not getting to who it really effects, the homeowner. Furthermore, what further complicates our tasks in negotiating the Short Sale terms and conditions with the servicers and there investors, is that HAFA is, to them, an opt in program. Making Home Affordable or MHA and its Short Sale Program HAFA are continually undermined by this opt in, or as it is stated in the HAFA guidelines, Section 7.1 “Prior to approving a borrower to participate in a HAFA short sale, the servicer must determine the minimum acceptable net proceeds (Minimum Net) that the investor will accept from the transaction and in accordance with its HAFA Policy.” Thus, regardless the guidelines, regardless our disclosures, and regardless how hard we negotiate the terms and conditions of the purchase agreement with the servicers, they hold the final key to making or breaking each transaction on a case by case circumstance.
For instance, just today, we received a HAFA approved Short Sale. However, based on the investors guidelines, as allowed by HAFA per section 7.1 of the HMA Handbook, the Servicer / Investor is removing the $3000 Homeowner incentive to attain their minimum NET requirements and will only contribute 6% or $3000 to the second lien holder, where HAFA guidelines allows up to $8500, again, the optional clause allowing servicers and there investors to write their own terms and conditions and still state that they are participating. No wonder Homeowners are confused when we explain terms and conditions of a short sale that have “Minimum Acceptable Guidelines” language in the MHA Handbook. The only real benefit that came from the HAFA guidelines through this HAFA approved Short Sale is the Release of deficiency. Now the Seller’s have to determine whether to move forward with the Short Sale Approval or not and we still have to determine if the second lienholder will accept the first leinholder’s contribution.
Thus keep the following in mind when explaining the HAFA guidelines to your clients / homeowners and what to expect from a Short Sale Negotiator’s Point of View;
- MHA’s HAFA guidelines are established by the government to assist homeowners, with the “Option” of each Servicer and it’s Investors to participate in the program and to determine their own guidelines based on the servicers’ investor minimum NET proceed parameters.
- Freddie Mac and Fannie Mae no longer participate in the HAFA program as of December 31, 2012.
- The government did extend the MHA’s HAFA and The Mortgage Debt Relief Act for all other participating servicers / investors until December 31, 2013.
- The updated guidelines for HAFA effective February 1st of 2013, regarding processing time, predetermined hardship and credit score parameters will hopefully assist in negotiating Short Sale Transactions, however, keep in mind the “Option” card the lenders continue to hold in their favor.
- Lenders and investor that are not participating in the HAFA program may have adopted their own incentive programs that Homeowners may qualify for through their own Short Sale process.
For further information regarding individual Service Companies that are still participating in HAFA, please contact one of our team members at Platinum Elite Group at info@PlatinumElite.com or our affiliates at Negotiation Service Providers, llc at LossMit@NSPLV.com