How to Do a Freddie Mac HAFA Short Sale
Freddie Mac no longer participates in the HAFA Short Sale Program as of December 31, 2012. Freddie Mac is governed by the Federal Housing Finance Agency. Regulation by the government is the biggest problem attached to the Freddie Mac HAFA short sale. It primary mission to provide liquidity, stability and affordability to the housing market, as defined by the Congress in a 1970 chapter. HAFA is an acronym for Home Affordable Foreclosure Alternatives. A HAFA short sale is a government program with 3 main highlights:
a) Streamlines the timeframe
- b) Relieves a seller from liability
- c) Provides relocation assistance, up to $3,000
You are supposed to follow very specific guidelines for the program if your loan is held by Freddie Mac and you are eligible for a HAFA short sale. It’s even more intricate than a Fannie Mae HAFA short sale. Which is probably why so many short sale agents are confused and sellers are hesitant to try.
Basics of a Freddie Mac HAFA Short Sale
The astonishing thing in Freddie Mac short sale is you don’t need a real estate agent to figure out if qualify for a Freddie Mac short sale or not. In fact it’s possible you will be disqualified from the program if you have already accepted a short sale offer. An ARASS is excluded from Freddie Mac HAFAs.
a) Look up your loan to determine that is held by Freddie Mac. Use the Freddie Mac Loan Lookup Tool.
b) Contact your bank and ask for Freddie Mac HAFA short sale paperwork.
c) Complete the paperwork and return it within 14 days. If you do not return the paperwork within 14 days, your file will be closed, possibly permanently.
d) Upon receipt, the bank has 30 days to approve your eligibility for Freddie Mac HAFA.
e) The bank will set a minimum “as is” price for 90 days, and allow 120 days for marketing.
f) When you receive an offer, you have 3 days to submit an RASS (request for approval of short sale).
Are You Eligible for a Freddie Mac HAFA Short Sale?
Not every seller having a short sale home will be eligible for a HAFA short sale whose loan is held by Freddie Mac. If you don’t qualify for a HAFA short sale then you are free to pursue the traditional short sale. Freddie Mac has very specific guidelines and some of them are here:
a) The home must be occupied and your principal residence
b) You must be more than 60 days delinquent.
c) Your cash reserves in the bank cannot exceed 3 times your PITI or $5,000, whichever is greater.
d) Your mortgage payment must be greater than 31% of your gross monthly income, but you won’t be disqualified for this reason alone. You need 2 reasons to be ineligible. See, I told you, it’s tricky.
Freddie Mac HAFA Short Sale Tips
For starters, find yourself a HAFA specialist. This person may be a short sale agent but make sure that he or she is certified to do HAFA short sale. Inquire about short sale certification before hiring the short sale commander. It is valuable to ask the number of HAFA short sales that the agent has closed and where these have been closed. Here are more helpful tips.
a) Retirement accounts are not considered as cash assets or a disqualifying factor. These include a 401K, 403b, 457, IRA or pension.
b) Freddie Mac will pay a 3rd party vendor for negotiation, separate from the real estate commission.
c) The bank may offer a deed-in-lieu of foreclosure, if it is authorized by Freddie Mac.
d) Maximum seller concession for buyer’s closing costs is 3% of the sales price.
e) Closing is within 45 days from approval, no more than 60 days.