HAFA is an official government program for short sales that allow sellers to receive a $3000 credit at closing of escrow to help homeowners get back on their feet. There are multiple steps that need to be taken to qualify and not everyone is eligible. First you must apply for the HAMP Program (A Loan Modification Program). If you are denied from the HAMP Program then you will be eligible to apply for the HAFA Program. Here are a few qualifications that one must meet to be qualified:
- You live in the home or have lived there within the last 12 months.
- Your first mortgage amount must be less than $729,750.
- You have not purchased a new house within the last 12 months.
- You originated the mortgage before January 1st, 2009.
- You have a documented financial hardship.
- You must not have been convicted within the last 10 years of felony larceny, theft, fraud, forgery, money laundering or tax evasion in connection with a mortgage or real estate transaction.
HAFA also allows the deficiency of your mortgage to be forgiven. (A deficiency is what you own on your mortgage minus the amount you sold it for example: If you own $150,000 on your mortgage and you sell it for $100,000, the deficiency would equal $50,000). Unlike conventional short sales, HAFA guarantees your servicer will waive the deficiency. This in additions to the 2007 Mortgage Debt Relief Act (which allows one to not have to pay sales tax on a short sale deficiency since it is considered income) allows for the homeowner to save thousands of dollars.
You ask, why would the government do this? They do not want you to foreclose. Foreclosure will hurt your credit. A short sale will help you get back on your feet financially much quicker so you can contribute to the economy and the Government is looking to pay hard cash for this to happen.
This program does have an end date, so if you are interested in applying or looking for more information you can call Steve Trang at 480-266-9960.