New HAFA Updates Take Effect February 1, 2013
The coming 2013 year will definitely bring about many changes in regard to homeowner laws and programs. While we still have no answers about any extension to the Mortgage Debt Forgiveness Relief Act we did get word about changes to the government’s Home Affordable Foreclosure Alternatives Program (HAFA), which represents the short sale section of the Making Home Affordable program.
Although the updated HAFA program updates take effect February 1, 2013, servicers can implement the changes earlier.
Even though the short sale process continues to improve, many homeowners as well as buyers and real estate agents complain about the lengthy decision making time involved with HAFA short sales so many will be happy to learn that the new rules require servicers to make a decision on a borrower’s request for a HAFA short sale within 30 days. That number shaves 15 days off the prior timeframe when servicers had 45 days.
Another change to speed up the process involves the hardship of a homeowner. HAFA will introduce a “pre-determined hardship.” Homeowners who have not paid their mortgage in over 90 days and have a FICO score less than 620 will be considered to have a pre-determined hardship.
In the past, much of the HAFA confusion surrounded homeowners who maintained current payments but experienced a hardship. The new HAFA rules help those non-delinquent borrowers but they still need to explain their hardship with an affidavit. The hardship affidavit can be found online at hmpadmin.com.
Besides assisting non-delinquent borrowers, the updated HAFA program can be used for non-owner occupied homes and offers tenants living in those homes up to $3,000 in relocation expenses. Finally this program addresses the needs of the tenants who oftentimes end up as suffering the worst consequences of a short sale.
The hardship affidavit can be found online at hmpadmin.com.
HAFA Flipping Days Drop
Another update seems to be a reflection of shady short sale transactions with the new requirements stating that both the buyer and seller must sign affidavits stating that the short sale represents an arms length transaction and that the buyer or seller neither give or receive funds that are not stated on the HUD-1 Settlement Statement. Doing any “off the HUD” money transactions can be considered fraud.
In one final change marked at investors, the new updates state that resales can’t occur within 30 days of a HAFA closing which marks a significant drop from the previous 90 days.
Hopefully these updates will make the HAFA short sale process a less grueling transaction.