Posted by: kgreenrealestate | August 5, 2012

Short Sale Guidelines

The theory behind Short Sales seems simple enough: If a homeowner owes more money on a home then the thome can sell for, and the homeowner is struggling to pay the mortgage, the lender will allow the home to be sold for less then owed.

For obvious reasons, Lenders are not big fans of this and often make it a complicated process.

In 4-2010, the Home Affordable Alternatives Program ( HAFA) released new guidelines designed to streamline the short sale process and allow more homeowners to sell and move on.

In it’s 1st yr, participating servicers initiated 12,266 HAFA agreements & completed 5,447 transactions.

According to NAR, the share of distressed homes, bank owned, &  pre-foreclosure sh sales- in 4-2011 dropped to 37% of total sales volume, down from 40% in March and an average of 39% over first 1/4.

HAFA compliments the Home Affordable Modification Program(HAMP) -loan modification program, by providing alternatives.

HAfA sh sale guidelines r designed to assist people who r unable to keep their home under the HAMP program. If HAMP doesnt work then a sh sale is next which is better than foreclosure.

It’s estimated that lenders lose about 40% of homes value on foreclosure, whereas the figure is about 19% on a sh sale. Moreover, the sh sale is a graceful exit from ownership, equaling better credit scores.

Lenders participating in HAFA maintain the following req for homeowners considering a sh sale: loand must b less than $729,750, made before Jan 09, and must b primary residence. Also, the homeowner must b delinquent & unable to pay mortgage, & homeowners mortgage amount must b more than 31% of before tax income.

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