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New Program to Speed Up Short Sale Process

Homeowners struggling to keep their mortgages current can now apply for short sales as an alternative, as government efforts are put in place to speed up the process and urge lenders to provide more assistance to troubled borrowers.

The program, called the Home Affordable Foreclosure Alternatives (HAFA), was implemented early this month and will run through December 2012. It is designed specifically to expedite the short sale process and raise awareness of the option.

HAFA works primarily by allowing lenders to pre-approve short sale sellers and set a sale price ahead of time. This will greatly reduce the market time of short sale homes and shorten the wait for closing, as approval usually takes weeks or months.

Realtor Brad Monroe believes the program will attract more real estate agents to the short sale option, as they are no longer faced with a lengthy approval process. According to him, short sales currently take an average of nine months to complete.

HAFA also ensures that qualified borrowers will be cleared of any deficiencies after the short sale. Short sale sellers may also be given $3,000 to cover moving expenses, provided they meet set requirements.

To qualify for HAFA, one must have previously applied for loan modification under the Home Affordable Modification Plan (HAMP). Those who do not qualify for modification or who fall back behind after getting approved can then apply for HAFA assistance.

Borrowers must also currently have a Fannie Mae or Freddie Mac-backed mortgage, use the property as their primary residence, owe less than $729,000 on the home, and have taken out the loan before 2009.