Fannie Mae no longer participates in the traditional HAFA short sale program. The new Fannie Mae HAFA short sale program places more stringent guidelines on borrowers who reside in the properties and want to have a short sale with deficiency forgiveness.
HAFA is an acronym for Home Affordable Foreclosure Alternatives and is a branch of the Making Home Affordable program for short sales for sellers in distress.
The first order of business in these, is to find out if the loan is Fannie Mae held. This can be obtained by going to the Fannie MAe website or Fannie Mae Loan Lookup. While the Fannie Mae HAFA Short Sale program offers:
- Release of personal liability
- No deficiency judgment
- Financial incentives to the servicers
- Payment of $8500 to 6% cap to the second lien holder
- Relocation assistance to the borrower up to $3,000 and
- Traditional commissions to realtors
The following are some of the reasons Fannie Mae can easily turn you down or request borrower contributions, unlike the traditional HAFA short sale Program.
For example:
- If the seller can afford the mortgage payments and chooses not to make the payments the short sale can be declined.
- If the seller has cash reserves that are equal to 3 or more PITI payments or $5,000 and up, the short sale can be declined
- If the foreclosure sale is pending, the short sale can be rejected because the sale is too close around the corner
- If the home is vacant, the borrower has to prove they moved more than 50 miles away and they have not bought a new home in 90 days
- If the subordinate lien holder will not release its lien for $6,000, then the borrower can be requested to make a contribution.
- the borrower may be asked to make a contribution or enter into a promissory note for the deficiency, or both, if they have reserves or savings in the bank
Servicing Guide Announcement SVC-2012-19 sets forth the Fannie Mae HAFA short sale requirements. Read up about it as the rules for short sales are changing.
Call us for a free consult to see if you qualify. The consultation is always free of charge.
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