Westlake Village Real Estate Blog

HAFA gives new guidance to mortgage loan servicers currently participating in the Home Affordable Modification Program (HAMP).

HAFA is designed to streamline the short-sale process by incorporating the following unique features. If your lender has agreed to participate in HAFA, here’s the deal:

• Borrower may receive preapproved short-sale terms prior to listing the property

• HAFA prohibits loan servicers from reducing real estate commissions

• HAFA requires borrowers to be fully released from future liability for the debt

• HAFA participants must use standardized processes, documents and time frames

• HAFA offers financial incentives to loan servicers, investors and borrowers

– $1,500 to servicers for handling a short-sale
– $2,000 to investors who share proceeds with second-lien holders
– $6,000 to second lien holders for releasing their claims
– $3,000 to borrowers (distressed sellers) for relocation assistance.

Coupled with the fact that forgiven mortgage debt may now not be taxable at the California or the federal level), this can only be good news for distressed sellers.

My thanks to Browyn Stanisch, of Fieldstone Financial for this information.