Government Program "HAFA" Pays Up To $1500 As Relocation Incentive to Property Sellers
HAFA is a government program that allows homeowners avoid foreclosure by completing a short sale or a deed-in-lieu of foreclosure, if they were unsuccessful in keeping their home under HAMP, and pays up to $1500 as relocation incentive to sellers.
- Riverside-San Bernardino, CA (1888PressRelease) May 11, 2011 - Home Affordable Foreclosure Alternative or HAFA is a government program that provides homeowners an opportunity to sell their homes via short sale and avoid foreclosure. Homeowners receive up to $1500 for relocation assistance.
In order to qualify for HAFA, borrower's total monthly mortgage payment must exceed 31% of gross income (before taxes and deductions). Also, property in question must be principal residence with first lien originated before 2009. Furthermore, mortgage must either be delinquent with unpaid principal balance not more than $729,750 (higher limits for 2 to 4 unit dwellings) or, default is reasonably foreseeable. And lastly, in order to qualify for HAFA, borrower was either not approved for a HAMP modification request, or a HAMP modification was offered but was not accepted by the homeowner, or the homeowner falls out of a HAMP modification, or the homeowner missed at least two consecutive payments during a HAMP modification, or the borrower asked for a Short Sale or DIL.
With HAFA, lenders are required to fully release homeowners from any future liability of the debt. Also, this program allows homeowners to receive pre-approved short sales terms before listing the property (including the minimum acceptable net proceeds).
While the program is designed to incentivize homeowners primarily, there are a few things that homeowners must be aware of. If the property is sold as a short sale, it cannot be sold to a relative; it must be an "Arm's Length" Transaction. Also, the amount of debt forgiven might be treated as income for tax purposes.
Although not all banks participate in HAFA, this program is definitely a positive step towards helping homeowners as this program is designed to financially incentivize homeowners unlike traditional short sales. Lenders are required to make a decision in 10 days to approve or disapprove a short sale or DIL which makes the entire process very quick.
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