Short sales once were extremely rare. But now, with unemployment still high, and home values down, more homeowners are pursuing short sales when they can’t afford their mortgage. Indeed, we recently wrote about the rise in short sales in Miami.
The sales of homes for less than the amount owed the bank, known as “short sales,” have been widely viewed as an alternative that could help slow the foreclosure epidemic. In theory, delinquent homeowners escape a mortgage they cannot afford, and lenders, although taking a loss, avoid the even costlier process of completing a foreclosure.
However, many homeowners have struggled to sell their home in short sales. A USA Today report revealed that only about 1 in 5 short sales transactions actually close.
Help could be on the way. Thanks to the federal government’s Home Affordable Foreclosure Alternatives, or HAFA program, many struggling homeowners may get some much needed relief.
HAFA establishes streamlined short sale rules and incentivizes borrowers and lenders to work together to avoid foreclosure. The rules — in effect between April 5, 2010, and Dec. 31, 2012 — also are intended to speed up the short sale process.
Under HAFA, borrowers receive preapproved short sale terms from the lender prior to putting the home on the market.
The HAFA guidelines apply to lenders who voluntarily participate in the HAMP program. The Department of Housing and Urban Development says more than 100 servicers have signed up to participate in HAMP, covering more than 89 percent of mortgage debt outstanding in the country.
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If you think you qualify for HAFA, or wish to learn more about your alternatives to foreclosure, please contact our office today.
We have been successful in defending many foreclosure cases when given an opportunity to develop a plan to properly defend the foreclosure.
If you are on the brink of foreclosure, need a real estate attorney, or just need to assess your legal rights, please contact our office today.