What is HAFA and is it a benefit to me in short selling my Los Angeles Home?
Posted by Jenny Durling on Thursday, May 24, 2012 at 12:00:48 AM By Jenny Durling / May 24, 2012 1 Comment
Yes, HAFA, or Home Affordable Foreclosure Alternatives, could be a benefit to you. HAFA was designed to help homeowners avoid foreclosure by allowing them to "sell short" or sign a Deed in Lieu of Foreclosure. According to MakingHomeAffordable.gov, the first benefit is that either of these options will have a lesser impact on your credit scores than will a foreclosure. A Deed in Lieu simply allows you to transfer title back to the bank without going through the foreclosure process. This is generally only allowed if you have no second mortgage. The second major benefit to HAFA is the avoidance of any possible deficiency after a short sale. This benefit is of no importance to Los Angeles homeowners, because California's SB 458 already disallows it. However, keep in mind that California homeowners can be held liable for the deficiency on a second mortgage or home equity line of credit if the house goes into foreclosure. That fact is an important reason to choose a Los Angeles short sale over foreclosure. The benefit of most interest to cash-strapped Los Angeles homeowners is the $3,000 in relocation assistance provided by HAFA upon closing a short sale under their program.
Which Mortgage Loans Qualify for HAFA?With all the various programs in effect today, it's hard to tell which program serves which homeowners. This one is for mortgages that are owned or guaranteed by Fannie Mae or Freddie Mac or serviced by HAMP participating mortgage servicers. Use this Look up Tool to see if your mortgage is owned or guaranteed by Fannie Mae or Freddie Mac. If it is not, check with your mortgage servicer (the bank you pay each month) to see if your loan qualifies. Many banks are volunatarily participating in the program. If you need assistance determining if you qualify, please call me at 213-215-4758.
Which Los Angeles Homeowners are eligible for HAFA?In order to be considered for HAFA, you must meet all of these requirements:
- You obtained your mortgage on or before January 1, 2009.
- You live there, or have lived there within the past year.
- You have not purchased another home within the past year.
- You have a financial hardship and can document it.
- Your first mortgage is less than $729,750
- Within the past ten years, you have not been convicted of any felony in connection with a mortgage or real estate transaction