MOST lenders will allow a so-called “Relocation Assistance” to home selling under Short Sale, but there are many guidelines that you have to qualify for and there are restrictions. This is also not Mandatory to lenders that they participate in this program. I am sure that you have heard of HAFA.
HAFA stands for a federal government program named “Home Affordable Foreclosure Alternatives Program” which was created to compliment other government program, the “Making Home Affordable Program.” HAFA steps in to help homeowners who:
1. do not qualify for a trial mortgage modification under the Making Home Affordable Program;
2. do not successfully complete the trial period for their modification;
3. miss at least two consecutive payments during their modification period; or
4. request a short sale or deed-in-lieu of foreclosure.
This program was created to further assist the HAMP program which was thought not to be helping enough homeowners with their mortgage problems.
With HAFA, the federal government is giving borrowers a way to circumvent that inevitable foreclosure after the modification idea has not worked for them. How? HAFA gives those borrowers a viable alternative to foreclosure. Here, the issue of being able to keep the home is not viable, and HAFA steps in to help the homeowner avoid a foreclosure on their record through either (1) a short sale or (2) a deed in lieu of foreclosure.
What about deficiencies? HAFA gives the borrower a clean slate.
In a short sale the lender (servicer) may have a remaining balance on the books, once the remaining amount due on the home loan is compared to the property value of the home itself. The negative number, “the deficiency,” can be the subject of a collection lawsuit by the lender in most states. However, HAFA provides further assistance to the borrower/homeowner by removing this vulnerability as the lender must agree to write off that loan balance, as well as all other obligations tied to the first lien mortgage. Under HAFA, once the lender accepts the short sale or the deed in lieu of foreclosure, the loan balance is considered cleared.
What about moving costs?
Once HAFA’s plan to salvage the failed modification situation through a short sale or deed-in-lieu, the final step remains of getting the homeowner/borrower into a new home – now that their home has been transferred to a buyer or to the bank. To that end, HAFA will pay up to $3000 per homeowner in relocation costs at closing.
On Dec. 31, 2010, there were 521,630 active permanent modifications and 152,289 active trial modifications, while 1,025,907 homeowners were rejected for HAMP modifications by the eight largest banks/servicers, and another 572,655 trial modifications failed.
Accordingly, the Treasury Department responded with changes that became effective February 1, 2011 to make these programs more helpful to American homeowners, found in its December 2010 version 3.0 of the Making Home Affordable Program Handbook for Servicers of Non-GSE Mortgages. Now, for example, banks/servicers do not have to verify a borrower’s financial information or to determine if the borrower’s total monthly mortgage payment exceeds 31
Can HAFA help you? Maybe, especially with these new changes. It’s worth your time to investigate
Now mostly all the lenders can only allow a “Relocation Assistance” if HAFA approves it. But there is one lender and only one lender/investor that will allow a larger amount to help homeowners move, that lender is Wells Fargo. Not all Wells Fargo Loans, you have to have been an original World SAvngs Loan that got bought out by Wachovia then now owned by Wells Fargo. Therefore if you have a “pick a payment” loan from back in the days, that now is being serviced by Wells Fargo, you have the option to receive $5,000 at closing doing a short sale. Again, this is case by case you should call me to get full details and clarification of such programs. They will also agree to waive all deficiencies after the Short Sale.
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Please give Ken Go a call of 1st Innovative Finance Group at (562)508-7048 and inquire to get these help options. You can also write to This e-mail address is being protected from spambots. You need JavaScript enabled to view it . Thanks.
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