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SHORT SALE

If you can’t afford your mortgage payment and it’s time for you to transition to more affordable housing, then you may be eligible for a short sale of your property or one of several other alternatives. Consider all options. We will explore all options to help you keep your home. If you do not wish to stay in your home, we can help make your transition to a new home easier.

WHAT IS A SHORT SALE?

According to the National Association of REALTORS®, “A short sale is the name used to describe a real estate transaction where the seller’s lender(s) agree to allow the property owner to sell the property for less than the amount of the loan(s) secured by the property. The consent of the seller’s lender(s) is necessary because without it there would not be enough money from the sale to pay off the lender(s) in full and to pay other costs of the sale.”

ALTERNATIVES TO A SHORT SALE:

  1. A loan modification is an consenting arrangement between a borrower and a lender. It can involve a reduction in the interest rate on the loan, a deferment in payments on the loan, an extension of time to pay back the loan, a reduction in principal of the loan, a combination of these possibilities, or other changes to the repayment plan.
  2. A foreclosure is a legal process through which the lender acquires title to the property from a borrower who has stopped making payments on a loan. The lender can foreclose whether or not the borrower consents.
  3. A deed in lieu of foreclosure occurs when the borrower offers to transfer the property to the lender, in lieu of the lender having to go through the foreclosure process, and the lender agrees to accept title to the property from the borrower and forgives the debt. A deed in lieu of foreclosure requires the consent of both lender and borrower.

Any of the following or other alternatives potentially have negative tax or credit consequences, or both, for the owner. Information provided is not intended as legal advice for any particular property owner or buyer.

The Making Home Affordable Program  (MHA) ®

The Making Home Affordable Program  (MHA) ® is a critical part of the Obama Administration’s broad strategy to help homeowners avoid foreclosure, stabilize the country’s housing market, and improve the nation’s economy. In an effort to enable more struggling homeowners to take advantage of the Making Home Affordable Program ®,  the administration has extended the application deadline of the program to December 31, 2013. MHA was launched in February 2009.

Home Affordable Foreclosure Alternatives (HAFA) Program

The administration has expanded the Home Affordable Modification Program (HAMP) to include provisions and incentives for servicers to allow short sales or deeds-in-lieu as positive option for eligible homeowners in default who wish to avoid foreclosure. The new program is called Home Affordable Foreclosure Alternatives (HAFA).

HAFA provides two options for transitioning out of your mortgage: a short sale or a Deed-in-Lieu (DIL) of foreclosure. In a short sale, the mortgage company lets you sell your house for an amount that falls “short” of the amount you still owe.

HAFA Eligibility

You may be eligible for HAFA if you meet all of the following criteria:

  • You have a documented financial hardship.
  • You have not purchased a new house within the last 12 months.
  • Your first mortgage is less than $729,750.
  • You obtained your mortgage on or before January 1, 2009.
  • You must not have been convicted within the last 10 years of felony larceny, theft, fraud, forgery, money laundering or tax evasion in connection with a mortgage or real estate transaction.

*Eligibility criteria are for guidance only. Contact your mortgage servicer to see if you qualify for HAFA.

HAFASM is available for mortgages that are owned or guaranteed by Fannie Mae and Freddie Mac (see Look Up Tools) or serviced by over 100 HAMPSMparticipating mortgage servicers.

The sooner you seek help, the more options you’ll have. If this is the first time you’ve worked with your mortgage company, they will want to ensure that you have been considered for other options to keep your home before they move forward with HAFA. When it’s time for HAFA, be prepared to provide the following:

Request for Mortgage Assistance (RMA)

The Federal Housing Finance Agency (FHFA) announced changes recently that will align guidelines for Fannie Mae and Freddie Mac short sales and allow lenders and servicers to quickly and more easily qualify borrowers for a short sale.

Here are some specific changes that are effective Nov. 1, 2012:

  • Eliminates current Fannie Mae and Freddie Mac short sale programs and creates a single standard short sale process for both entities (Fannie and Freddie HAFA programs will expire at the end of the year).
  •  Enables servicers to quickly and easily qualify certain borrowers who are current on their mortgages for short sales without waiting for an approval from Fannie Mae or Freddie Mac
  • Offers special treatment for military personnel with Permanent Change of Station (PCS) orders.
  • Standardizes and clarifies foreclosure suspensions on a property with an approved short sale.
  • May pay borrowers up to $3,000 in relocation assistance.
  • Fannie Mae and Freddie Mac will offer up to $6,000 to subordinate lien holders to expedite a short sale.

Additionally, FHFA clarified that a borrower experiencing a hardship must wait at least two years before becoming eligible for a Fannie Mae or Freddie Mac loan.

These changes follow FHFA’s announcement in June that established strict timelines for servicers to respond to short sales within 30 days of receipt of a short sale offer, provide weekly status updates to the borrower, and communicate a final decision to the borrower within 60 days of receipt of the offer.

If you have additional questions about getting mortgage help, please contact our housing experts at contact. We can help you understand your options, design a plan to suit your individual situation, and prepare your application. Research shows that homeowners who work with housing experts are more successful and have better long-term outcomes. There is no cost to you for this valuable, around-the-clock service. Help is available!