This is part 1 of a 3 part series that I had written for another friend’s blog. It is now being published here for the benefit of Foreclosure Guard readers.
– Philip Tesoriero, Co-creator of Foreclosure Guard
Many changes have arrived in the processing of short sales. Recently the Treasury department published new short sale guidelines which they refer to as the Home Affordable Foreclosure Alternatives or HAFA. It is important to discuss the process, manage expectations and consider all outcomes. The goal of course, is to prepare and submit an offer that will be approved so you can resolve your financial challenges related to your home.
The first thing you need to consider is what conditions need to exist to engage in a short sale. By definition a short sale is when the unpaid balance of liens[1] against your property exceeds the market value. This is also referred to as being “upside down” or “underwater” . You will also need to demonstrate the inability to make your monthly mortgage payment, and prove a significant level of hardship. Acceptable hardships are generally broken down into 5 categories:
- Death
- Illness
- Divorce
- Involuntary loss of employment/income
- Natural disaster
That is the “old” definition; and it still holds true. However, there is more to it now than ever before. Lenders and servicers who are now processing short sales and in agreement with the new Treasury guidelines, which are scheduled to begin on April 5, 2010. These guidelines require that a loan modification was attempted unsuccessfully, or you did not qualify under the HAMP[2] modification standards. If these conditions are not met, there is a good chance you will not qualify under the HAFA program
Contrary to popular belief, it is not necessary to be late on your mortgage as long as a default is reasonably foreseeable. It is also important for you to establish the following as well: 1: Did you get this loan prior to January 1, 2009? 2: Is it a first lien? 3: Is the current balance on the loan less than $729,750?
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[1] the right to take another’s property if an obligation is not discharged
[2] For more information on Home Affordable Modification Program (HAMP) https://www.hmpadmin.com/portal/index.html