Short Sales & HAFA) The new Treasury Department guidelines that went into effect on April 5th, 2010 have already been amended. Although it is still too early to determine if HAFA (Home Affordable Foreclosure Alternative) will actually bring some uniformity to the confusing and difficult short sale process, the new changes actually could have a beneficial effect.
The first change increases the amount of relocation expenses the short sale seller can be paid from $1,500 to $3,000. In other words, if the Seller can accomplish a successful HAFA short sale, the short sale lender will pay the Seller $3,000 from the sales proceeds to assist in the Seller’s moving costs. (This $3,000 will be reimbursed to the short sale lender by the Treasury Department)
The second change allows the first lien short sale lender to pay out of the sales proceeds up to $6,000 to the second short sale lender (if applicable) in order for the second to release its lien. The Treasury Department will reimburse the first lender $2,000 ($1 for each $3 paid to the second lien holder).
There are still serious issues with HAFA. For example, the program is voluntary especially for the second lien holder. But if a short sale can be accomplished under HAFA there are significant benefits including that the Seller will be released from all liability for the repayment of the mortgage debt. We recently submitted several HAFA short sale applications and are awaiting the lenders’ responses, including the inevitable lessons learned.
Please contact me if you have any questions.
William D. Tucker, III
Tucker Griffin Barnes P.C.
Charlottesville, Virginia
434-973-7474
Tucker@TGBlaw.com
http://www.tgblaw.com/
http://www.tgblaw.blogspot.com/
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