I close on a short sale property next week and saw something on the HUD1 that I couldn’t believe. The seller is getting 3k back at closing. Is this a new practice for banks?
dlmcgill
I checked on this and it is definitely true. The program is called the Home Affordable Foreclosure Alternative (HAFA) and is part of President Obama’s Making Home Affordable (MHA) Program that provides financial incentives to customers and lenders for utilizing a short sale or Deed-in-Lieu to avoid a foreclosure on an eligible loan.
HAFA allows any qualifying loan to receive $3,000 at closing. FHA has a similar program but the payout is much less. It is a shame more Americans do not know about this program.
This is great.What could be reason for this information not being out there in the public?
It is out there publicly, you just have to know where to look. Plus, banks do not like telling their borrowers that the government allows them to give defaulters money. Cripe, they just defaulted on their loan and cost banks possibly thousands of dollars, can you see why a loan officer would not be especially forthcoming in offering some of their government reimbursement?
But it is there and if you know about it, you can now tell your clients about it too.
In either case, HAFA offers benefits that make the transition as favorable as possible:
- You can get free advice from HUD-approved housing counselors and licensed real estate professionals.
Unlike conventional short sales, a HAFA short sale completely releases you from your mortgage debt after selling
the property.
This means you will no longer be responsible for the amount that falls “short” of the amount you still owe. The deficiency is guaranteed to be waived by the servicer.
In a HAFA short sale, your mortgage company works with you to determine an acceptable sale price.
HAFA has a less negative effect on your credit score than foreclosure or conventional short sales.
When you close, HAFA may provide $3,000 in relocation assistance.
Regards,