Understanding HAFA: Tools and Resources

Understanding HAFA: Tools and Resources

The U.S. Treasury Department's guidelines to streamline Short Sales took effect April 5.

The Home Affordable Foreclosure Alternatives Program (HAFA), part of the Home Affordable Modification Program (HAMP), provides financial incentives and simplifies Short Sales procedures by setting limits on the time it takes lenders to respond, freeing borrowers from debt and capping claims of subordinate lenders.

The Treasury plan arrived after more than a year's work by Dave Liniger and RE/MAX leadership to persuade federal lawmakers to address the need for a simpler Short Sale process.

"While the plan doesn't include all of our suggestions, we feel it's a big step in the right direction," Liniger says. "These new policies will make Short Sales much more attractive to our clients and much easier for us to complete."

Tools and resources:
• Download a RE/MAX University comprehensive PDF outlining the plan.
• Read a remax.com consumer article about the details.
• Check out several videos, such as "Short Sales: The Basics," and "RE/MAX Agents Help Homeowners Avoid Foreclosure with Short Sales," which can help you introduce the concept to potential clients.
• Visit the government's HAFA Overview page and download the Updated Supplemental Directive that spells out the plan.
• Get Short Sale information from NAR's REALTOR.org site, including details on HAFA.
• Download NAR's HAFA FAQs file and visit its Short Sale Tools page.

With unemployment over 10 percent and millions of adjustable-rate mortgages primed to reset next year, a "tsunami" of distressed properties could be on the horizon, Liniger says. The new guidelines, as well as a growing acceptance by lenders and second-lien holders, give homeowners a better chance of closing a Short Sale rather than losing their house to foreclosure.

Here are some of the program's key guidelines (download the program's full details in the HAMP Supplemental Directive): NOTE: These guidelines were revised by Treasury in March 2010 – the incentives below are the UPDATED figures current as of April 2010.

Lenders must respond to Short Sale requests within 10 business days of receipt of the offer package.
The seller will be released from all liability for repayment of the mortgage debt.
Subsequently, the seller is entitled to a relocation incentive of $3,000, which will be deducted from the gross sale proceeds at closing.
The lender will be paid $1,500 to cover administrative and processing costs for a Short Sale or a deed-in-lieu.
The property must be listed with a licensed real estate professional who does regular business in the community where the property is located.
The lender is prohibited from requiring, as a condition of approving the Short Sale, a reduction in the agreed-upon real estate commission.
The investor will be paid a maximum of $2,000 for allowing a total of up to $6,000 in Short Sale proceeds to be distributed to subordinate lien holders.

RE/MAX leaders have been advocating Short Sale improvements for quite some time. In September, Liniger met with Housing and Urban Development Secretary Shaun Donovan and other U.S. housing officials to discuss the need for prompt action. A meeting with Sen. Harry Reid (D-Nev.) also moved the process along.

For their part, RE/MAX Associates have embraced training in Short Sales and REOs. The network accounts for more than 10,000 Certified Distressed Property Expert designees. That education will continue to play a vital role in order for Associates to successfully handle Short Sale transactions and establish themselves as the leading experts in their markets, Liniger says.

"Associates should become familiar with the new guidelines and put the details into their presentations," Liniger said.

Keep checking Mainstreet for new details and additional resources to help you learn more and spread the word to clients.