I just got a hold of these news from the closing attorney I use for my properties. If you are interested in doing a short sale or investing in real estate through short sales, you will want to verify the following information and see if it can help you:
Changes to HAFA make more homeowners eligible for streamlined short sales.
Late last month, the U.S. Treasury Department tweaked the rules of the Home Affordable Foreclosure Alternatives program to make short sales easier for everyone.
HAFA, which was launched in April 2010, standardized short sale guidelines for everyone - and a lot of lenders signed up to participate.
But the program hasnt been too successful. Even though it streamlined and standardized the short sale process for everyone, thereve been only 661 short sales nationwide under HAFA.
With over 11 million homeowners underwater, theres a great demand for short sales. So the Treasury Department eliminated some of the HAFA guidelines that were holding up short sale approvals.
So, heres what changed:
- Lenders discounting their payoffs dont have to verify their borrowers finances.
- Lenders dont have to check whether their borrowers mortgage payment exceeds 31 of their income.
- Theres a $6,000 total cap that can be paid to junior lien holders, including second mortgages.
- Borrowers seeking a short sale must get an answer within 30 days.
The last change is the biggest. As any investor who has made a short sale offer knows, sometimes it takes months to get a response. Delays have killed far too many short sales as buyers just gave up waiting.
But with these changes, and with the number of underwater homeowners expected to rise as prices continue to fall, the government hopes that a lot more homeowners will qualify for HAFA short sales.
Thats good news for real estate investors. Short sales currently make up a large portion of overall sales. When combined with REOs, over half of all sales are distressed. Getting more and more homeowners into HAFA opens up that many more properties for you to buy.