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Understanding the HAFA Short Sale Program

The HAFA Short Sale Program has great benefits, but is riddled with challenges that even seasoned professionals struggle with.



hafa short sale program

hafa short sale program

Troubles with the HAFA Short Sale Program

I was just out cruising the Internet and I read a blog post where an agent was seeking support for her HAFA short sale. Troubles with a short sale (not just a HAFA short sale) are a dime a dozen.

Trying to manage all of the details of the transaction, keeping the buyers and sellers happy, and getting multiple banks to move towards short sale approval is not easy feat, even for a seasoned professional.

HAFA Review

You may recall that HAFA stands for Home Affordable Foreclosure Alternatives, which is the name of the Treasury program, which allows certain distressed borrowers to participate in a short sale or a deed-in-lieu of foreclosure with some specific benefits.

The benefits of the HAFA short sale include:

  • Release from liability to remaining mortgage debt after the closing of the short sale
  • The mortgage company works with the seller and the agent to determine an acceptable selling price.
  • $3000 in relocation assistance to the resident of the property (owner or tenant)
  • The first lien holder will offer the junior lien holder(s) up to $8500.
  • HAFA has new credit reporting features, which allow it to have a lesser impact on your credit than a conventional short sale or foreclosure.

Second Lien Holders Receive Up to $8500

The agent in the article I read was confused because the first was only offering the junior lien holder something less than $8500. This agent felt that the lender did not understand the HAFA Guidelines.

Unfortunately, HAFA guidelines clearly state that the second will be offered an amount up to $8500. In this case, it appears that the second was not being very accommodating.

A Few Tips for Working HAFA Short Sales

When working on your next HAFA short sale, here are a few other things to consider:

Submit short sale packages to all lien holders at the same time. It is a best practice in short sale negotiating and processing to submit short sale packages to all lien holders at the same time. Since short sale processing time frames are often a mystery and can be lengthy, it is best to get the short sale package in line for review as early as possible. If you learn in the midst of the short sale processing of a change, than new settlement statements and/or contracts can be submitted during the short sale process.

Only mortgage loans need apply. While the HAFA program is set to pay up to $8500 to junior lien holders, this means $8500 for other mortgages. What this does not mean is that the $8500 can be applied to the seller’s unpaid HOA or water bill. This money also cannot be applied to an IRS Tax Lien or any other lien that is not a mortgage. So, if your short sale listing has some of these other liens, you will need to make a plan (and start early) to get those liens removed prior to closing.

Short sales are tricky and not for the faint of heart. The agent ranting on the Internet may have lots more details about her HAFA short sale that were not at my disposal. But, as you can see, there are a lot of criteria to consider when processing a short sale. Each short sale situation is as unique—just as all fingerprints are different and no two snowflakes are the same.

Melissa Zavala is the Broker/Owner of Broadpoint Properties and Head Honcho of Short Sale Expeditor®, and Chief Executive Officer of Transaction 911. Before landing in real estate, she had careers in education and publishing. Most recently, she has been able to use her teaching and organizational skills while traveling the world over—dispelling myths about the distressed property market, engaging and motivating real estate agents, and sharing her passion for real estate. When she isn’t speaking or writing, Melissa enjoys practicing yoga, walking the dog, and vacationing at beach resorts.

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1 Comment

1 Comment

  1. Bill Black

    February 6, 2013 at 1:56 pm

    Great info- thanks for sharing.

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Austin tops the list of best places to buy a home

When looking to buy a home, taking the long view is important before making such a huge investment – where are the best places to make that commitment?



Looking at the bigger picture

(REALUOSO.COM) – Let us first express that although we are completely biased about Texas (we’re headquartered here, I personally grew up here), the data is not – Texas is the best. That’s a scientific fact. There’s a running joke in Austin that if there is a list of “best places to [anything],” we’re on it, and the joke causes eye rolls instead of humility (we’re sore winners and sore losers in this town).

That said, dug into the data and determined that the top 12 places to buy a home are currently Texas and North Carolina (and Portland, I guess you’re okay too or whatever).

They examined the nerdiest of numbers from the compound annual growth rate in inflation-adjusted GDP to cost premium, affordability, taxes, job growth, and housing availability.

“Buying a house is a big decision and a big commitment,” the company notes. “Although U.S. home prices have risen in the long term, the last decade has shown that path is sometimes full of twists, turns, dizzying heights and steep, abrupt falls. Today, home prices are stabilizing and increasing in most areas of the U.S.”

Click here to continue reading the list of the 12 best places to buy a home…

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Housing News

Average age of houses on the rise, so is it now better or worse to buy new?

With aging housing in America, are first-time buyers better off buying new or existing homes? The average age of a home is rising, as is the price of new housing, so a shift could be upon us.



aging housing inventory

aging housing inventory

The average home age is higher than ever

(REALUOSO.COM) – In a survey from the Department of Housing and Urban Development American Housing Survey (AHS), the median age of homes in the United States was 35 years old. In Texas, homes are a bit younger with the median age between 19 – 29 years. The northeast has the oldest homes, with the median age between 50 – 61 years. In 1985, the median age of a home was only 23 years.

With more houses around 40 years old, the National Association of Realtors asserts that homeowners will have to undertake remodeling and renovation projects before selling unless the home is sold as-is, in which case the buyer will be responsible to update their new residence. Even homeowners who aren’t selling will need to consider remodeling for structural and aesthetic reasons.

Prices of new homes on the rise

Newer homes cost more than they used to. The price differential between new homes and older homes has increased from 10 percent traditionally to around 37 percent in 2014. This is due to rising construction costs, scarcity of lots, and a low inventory of new homes that doesn’t meet the demand.

Click here to continue reading this story…

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Housing News

Are Realtors the real loser in the fight between Zillow Group and Move, Inc.?

The last year has been one of dramatic and rapid change in the real estate tech sector, but Realtors are vulnerable, and we’re worried.



zillow move

zillow move

Why Realtors are vulnerable to these rapid changes

(REALUOSO.COM) – Corporate warfare demands headlines in every industry, but in the real estate tech sector, a storm has been brewing for years, which in the last year has come to a head. Zillow Group and Move, Inc. (which is owned by News Corp. and operates ListHub,, TopProducer, and other brands) have been competing for a decade now, and the race has appeared to be an aggressive yet polite boxing match. Last year, the gloves came off, and now, they’ve drawn swords and appear to want blood.

Note: We’ll let you decide which company plays which role in the image above.

So how then, does any of this make Realtors the victims of this sword fight? Let’s get everyone up to speed, and then we’ll discuss.

1. Zillow poaches top talent, Move/NAR sues

It all started last year when the gloves came off – Move’s Chief Strategy Officer (who was also’s President), Errol Samuelson jumped ship and joined Zillow on the same day he phoned in his resignation without notice. He left under questionable circumstances, which has led to a lengthy legal battle (wherein Move and NAR have sued Zillow and Samuelson over allegations of breach of contract, breach of fiduciary duty, and misappropriation of trade secrets), with the most recent motion being for contempt, which a judge granted to Move/NAR after the mysterious “Samuelson Memo” surfaced.

Salt was added to the wound when Move awarded Samuelson’s job to Move veteran, Curt Beardsley, who days after Samuelson left, also defected to Zillow. This too led to a lawsuit, with allegations including breach of contract, violation of corporations code, illegal dumping of stocks, and Move has sought restitution. These charges are extremely serious, but demanded slightly less attention than the ongoing lawsuit against Samuelson.

2. Two major media brands emerge

Last fall, the News Corp. acquisition of Move, Inc. was given the green light by the feds, and this month, Zillow finalized their acquisition of Trulia.

…Click here to continue reading this story…

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