You may have heard that the government’s Home Affordable Foreclosure Alternatives Program (HAFA) ended December 31, 2012. New policy changes for HAFA will become effective as of February 1, 2013 but the banks can implement these new changes prior to this date.

In addition, despite what you may have read about Bank of America no longer participating in the HAFA program, BOA has in fact extended its HAFA program until December 31, 2013. The changes that will be taking place within the program are as follows:

  • Servicers must make a decision regarding a seller’s HAFA eligibility within 30 days. This is in comparison to the previous 45-day time frame.
  • Select sellers can have what is called a “pre-determined hardship.”  To qualify for a pre-determined hardship, the seller must be 90+ days delinquent with their mortgage payment and have a FICO score less than 620. If the seller qualifies for the pre-determined hardship then the seller must sign a hardship affidavit before closing a HAFA short sale.
  • If a seller has a good credit score and is not delinquent with his payment (HAFA guidelines state the borrower must be 60+ days behind in payments), can still qualify for HAFA but will need to explain the nature of his hardship in the hardship affidavit.
  • HAFA also provides assistance for short sales where the property is not owner-occupied. If qualified, HAFA offers relocation assistance to those tenants living in the distressed property and the tenants are eligible to receive up to $3000.00.
  • The seller and buyer are also required to both execute a new arms-length affidavit that affirms the sale “represents an arms-length transaction and that no money is being given or received that is not reflected on the HUD 1 Settlement Statement.”
  • The reimbursement amount to primary mortgage investors, when payments are made to subordinate junior lien holders, can be up to $5000.00, when previously it was $2000.00. This does not change that the maximum amount a subordinate junior lien holder is that of $8500.00 as this change relates to the primary investor only.

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