Short sale process takes place when a borrower is no longer able to make payment on the property, due to hardship and many other financial draining situations. The lender would rather complete a short sale instead of proceeding with a foreclosure process because the losses are less with a short sale. Most would expect the short sale process to be quick; unfortunately this is not the case.
For most realtors who are working on short sale properties know that the process can take 3-6 months, sometimes causing their buyer to step back from the offer. Lenders are over extending the process which makes short sale properties less desirable. Some individuals do not have the patience or luxury of waiting months to get an approval on a property. Most potential buyers get discourage, causing them to withdraw their offer.
On April 4, 2010, the Home Affordable Foreclosure Alternatives Act (HAFA) will hopefully change the dire process of short sales.
- HAFA program will have some of the same guidelines of the Home Affordable Modification Program (HAMP), but with improvements to speed up the short sale process.
- Lenders will be required to answer back within 10 days.
- Banks that offer HAMP will be required to have HAFA as an available option for the consumer.
- Borrowers will be completely released of responsibility on their first mortgage debt.
- Allows for pre-approved short sales
- $1,500 is given to borrowers for relocation expenses, $1,000 covers administrative and processing fees and $1,000 to investors who have allowed up to $3,000 in short sale proceeds to be distributed to subordinate lien holders.
- 3% commission will become mandatory for the listing agent and buyer’s commission.
HAFA program is expected to become an alternative for foreclosure and sometimes bankruptcy for those who were not fortunate enough to qualify for the Home Affordable Modification Program. December 31, 2012 is set to be the expiration date for the program.