HAFA II – Good News For Those Considering a Short Sale

The Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, has released details of a new program to expedite short sales. It’s commonly known as HAFA II.

HAFA is an acronym for the governments Home Affordable Foreclosure Alternative Program. This program was setup by the government to help during the real estate crisis of the last few years.

The HAFA II program consolidates Fannie and Freddie’s current short sale programs, including the original Home Affordable Foreclosure Alternative (HAFA) programs and other proprietary ones. This new streamlined approach will be known as the “Standard Short Sale/HAFA II,” and is designed to make short sales easier for those most in need. It all means a wider range of Homeowners may now be eligible for short sales under HAFA II

As of November 1, 2012, HAFA II takes effect and replaces the old program. HAFA II provides for significant changes in Fannie Mae and Freddie Mac guidelines for short sales. The most significant changes is that, if a homeowner has a mortgage with Fannie Mae or Freddie Mac, the homeowner may sell their home in a short sale even if they are current on their mortgage as long as they have an eligible hardship. This is very good for those who are significantly underwater on their mortgage. Being “underwater” means you owe more than you can sell the home for in today’s market.

Of course as mentioned above, being able to prove a hardship situation is also required for approval.

Additionally, the servicers of a Fannie Mae or Freddie Mac loan will be able to expedite the processing of the short sale process for these borrowers that have the documented hardship without any additional approval from either Fannie Mae or Freddie Mac. Examples of hardship situations that qualify are death of a borrower or co-borrower, divorce, disability, or relocation for a job.

The second change in HAFA II is a mandatory use of Re-Sale Deed Restrictions. Fannie Mae and Freddie Mac both mandate that a restriction on the resale of the property be placed on the face of the deed at closing. The Buyer is prohibited from selling the subject property for a period of thirty (30) days from the date of the deed. Then after the thirty (30) day prohibition, the Buyer is further prohibited from selling the subject property for a sales price of more than 120% of the short sale price for a period of ninety (90) days from the date of the deed.