How to Short Sale a Home

Loan Modification Denied-Now What?

Loan Modification Denied—Now What? New Short Sale Guidelines Under

HAFA (Home Affordable Foreclosure Alternatives) Program

Because so many million homeowners across the United States are struggling to make their mortgage payments and facing foreclosure, the US Treasury Department under Making Home
implemented the Home Affordable Foreclosure Alternatives Program (HAFA).

Effective April 5, 2010, HAFA offers incentives to homeowners, investors, and loan servicers to complete a short sale or deed in lieu of foreclosure. The incentives for homeowners include
receiving $3,000 in relocation costs and avoiding foreclosure.

Not all homeowners qualify. The HAFA program applies to homeowners who:

1. do not qualify for a trial mortgage modification under the Making Home Affordable
2. do not successfully complete the trial period for their modification;
3. miss at least two consecutive payments during their modification period; or
4. request a short sale or deed-in-lieu of foreclosure.
In addition, the property must be the homeowners primary residence, the first mortgage must
have been obtained prior to January, 2009, loans balances cannot exceed $729,750, and the
homeowners’ monthly principal, interest, taxes and insurance must exceed 31% of their gross
monthly income.

Mortgage servicers participating in the Making Home Affordable Program (HAMP) must evaluate homeowners for a Home Affordable Modification before evaluating them for other
options as well as implement the Home Affordable Foreclosure Alternatives Program (HAFA). Some limitations under HAFA include the bank pre-approving short sale terms (the servicer can
dictate price before the home can list it), the deficiency will be reported to the IRS, the servicer may still deny the short sale, VA and FHA loans are excluded, and investor properties are excluded.

Always consult a real estate attorney

We offer free consultations to homeowners struggling to make their house payments and trying to decide
what to do. Don’t be a victim: know your rights. Call today to learn what options may be available to you. We may be able to help you stop foreclosure and help you
know what options are available under HAFA, HAMP or Making Home Affordable.

By Diego Loya

Diego Loya is a Realtor - Broker at Home Living Real Estate Brokerage, a Orange County full services real estate company. Over the past 12 years, Diego has helped homeowners sell and buy their homes. He's loves educating and empowering real estate consumers. You can find him on Google, Facebook and Twitter.

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