The HAFA Mortgage Program adds Assurances to Short Sale Transactions

As foreclosures rise in Florida, homeowners seeking relief from the turbulent economic environment can find added protection in the new federal program called Home Affordable Modification Program (HAMP). This program allows short sales certain guarantees that prevent lenders from coming against home owners with a deficiency judgment in later years. Freddie Mac is its compliance agent for all HAFA short sales. The Department of the Treasury authorizes all programs, including HAFA, under the Making Home Affordable Homes umbrella.

For a short sale to qualify for HAFA, the home must be a principal residence, at least one first-lien mortgage, the mortgage is at least 3 months in delinquency, the principal mortgage balance must be under $729,750, and a principal and interest payment exceeding 31 percent of gross income.

This is big news for those in financial trouble who seek remedies as opposed to deeds-in-lieu foreclosure or foreclosure.

A short sale is a real estate transaction where the lender agrees to accept less than what's owned on a property. A short sale is a popular way for homeowners to escape a foreclosure action and possibly eliminating any future threat of a foreclosure or short-sale judgment against the homeowner. To inquire about a possible short sale, consider You can list your property 100% online with one of Florida's most knowledgeable short sale brokers, Keith Gordon.

A short sale can be a straight forward process at times or an arduous process. There are three key elements to have a successful short sale: a patient and controllable buyer; an agent that understands how to price a home correctly and get an offer to meet the lenders expectation; and finally, a "short-sale department" that truly understands how to package a short sale for the lenders.

At ADDvantage® Real Estate, we offer professional guidance for short sales in Florida. We are members of 95% of all Florida Realtor MLS Associations from the Florida Keys, to Jacksonville, the Panhandle and of course Orlando, Tampa, and even Marco Island. We have a professional short sale program. When ADDvantage® handles your short sale, we use no methods where the process becomes confusing or wastes the seller's time. Our approach to a successful short sale is "get it the right the first time." Keith Gordon, the lead broker for all short sales in Florida analyzes the property for value also called BPO (Broker Price Opinion). This value is best described as the price (offer) that a lender would accept. Pricing lower or higher than BPO is a waste of time. Short sales in Florida that are priced correctly should get a contract within weeks.

To get started with your short sale in Florida, you can list your home on Click, list my property. Once your data is entered, Keith Gordon will call you and talk about value and the best strategy that meets your specific plan. There always seems to be circumstances that make every short sale unique. Some owners want to extend their time of their short sale as long as possible while others want speed. Whatever your situation is, we understand all the intricacies that make up the short sale process. You could always call Keith at 727-942-2929 or 1-877-232-9695.

More Information on Home Affordable Modification Program (HAMP)

All HAFA short sale applicants must be answered by the lender within 30 days of application. To make the HAFA process work for all parties, the homeowners must respond to the HAFA written notice of acceptance with 14 days of receipt in order for the lender to meet their 30 day deadline.

There are incentives for the lenders to participate with HAFA. The same rules apply to HAFA transactions as with other short sales and deeds-in-lieu where the lender or loan servicer of the primary mortgage must approve of the transaction and conduct their own independent appraisal or BPO. The difference is that under HAFA, the lender must agree to accept the proceeds from the short sale of the home as payment in full, waiving their right to collect the balance or short-fall of the loan from the homeowner.

Homeowners that do qualify for participation in HAFA cannot save themselves from losing his or her property, but it can mitigate and eliminate the future liability of the lender coming against the homeowner for the short-fall or deficiency as well as the effects of a foreclosure on the homeowner's credit. The lenders have financial incentives as well for participation in HAFA, which include a $1,000 servicing bonus for lenders and a $1,500 relocation bonus for displaced homeowners.

Each lender or servicer of the first-lien mortgage decides on whether they or the homeowner will negotiate with any subordinate (junior, HELOC, second mortgages) lien holders. HELOCs and other non-first position subordinate liens against the property may be allowed to keep a limited amount of the proceeds not to exceed $3,000 for each lien holder. The primary lender (first position) has the final say with respect to all payoffs and agreements with junior lien holders. All lenders to an approved HAFA short sale transaction waive their right to collect the balance due on their loans. The primary lender may not be held responsible if any junior lenders that decide to decline participation and have the right to pursue alternatives against the borrower(s) for the amount of their unpaid debt.

Unlike a traditional short sale where speed of closing is on everyone's mind, with a HAFA short sale transaction there is a 120 day minimum "waiting period" from the date the SSA was mailed to the homeowner to find a buyer and close the short sale. The lender can grant an extension for another 245 calendar days not to exceed a total term of 12 months. With respect to HAFA and all short sales, all parties will be signing a "Notice of Arms Length Transaction" attesting to the fact that the sale is an arms-length transaction and that the subject property is not being sold or leased back to the original seller.

The new buyer of a HAFA sort sale transaction is restricted from re-selling the property for 90 days. Agent's commissions are protected an un-discounted rate of 6%. HAFA also requires that the lender agree to suspend all foreclosure action in good faith, pending the outcome.

The HAFA program is set to begin on April 5, 2010. Servicers may initiate a HAFA transaction earlier in 2010 under certain conditions. As of this writing, all HAFA agreements must be finalized and signed by December 31, 2012.

More information on HAFA can be found on As well, the Treasury Department's Supplemental Directive 09-09 has more details and sample forms to be used in processing HAFA transactions.