New Short Sale effected April 5, HAFA, which stands for Home Affordable Foreclosure Alternatives by the government. This is, yet another stimulus program aims to real estate recovery and home retention for the American publics.
How will the program work out is still questionable and need time to test its effectiveness. But the good news is this forces lenders to consider a short sale before they can foreclose, if loan modification does not work out.
Other points on this “approved short sale“:
1. The lender will have to approve the amount for sale PRIOR to being on the market.
2. Lender cannot pursuit the owners after the short sale for deficiency.
3. Lender will pay up to $3,000 for any junior liens.
4. Lender can even give owner $1,500 relocation funds to move.
But there are other situations and (many) conditions:
1. Not all lenders are participating.
2. Must be the owner’s primary residency
3. Only applies to first liens taken out on or before 1/1/09.
4. Must be deliquent or about to default, current balance must be =< $729,750.
5. Total mortgage payment must exceed 31% of monthly gross income.
All in all, even if your loan qualifies, it’s still up to the lender to decide if short sale or foreclosure is to their best interest. And the price they put on the short sale. And you have to come up => 31% of your gross income monthly payment while in short sale.
If your short sale is not successful, you may have to agree on a automatic deed-in-lieu of forelosure action.
There are still situations as the 2nd will not take the $3,000 “buy-out”, so your short sale will be failed.
It’s not easy to go through a short sale experience, what’s the impact on home owners who are in waters? What about the real estate pricing? We shall wait for the statistics in early Fall.