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Short SalesHUD Moves To Speed The Short Sale Process

With many homeowners unable to sell their homes because of slow response times from their banks or onerous government regulations, The Department of Housing And Urban Development (HUD) moves to speed the short sale process. The new guidelines, part of The Home Affordable Alternatives Program (HAFA) are set to go into effect on April 5, 2010, in an attempt to streamline the short sale process for homeowners who are unable to make their mortgage payments.

The HAFA guidelines cover almost 90% of all mortgages, and apply to those lenders currently participating in the HAMP program. Under the program, applicants would initially apply for a loan modification under HAMP, and those who fail to qualify would then be considered for a short sale through HAFA. However, while the program seems to be a dramatic improvement from the old system, the specifics are spelled out in a 43 page booklet, that is not exactly easy reading. Those who wish to learn more about the program can read the full document HERE.

In order to be considered for a short sale, home owners must meet the following qualifications:

  • Applicants must be delinquent and must demonstrate an inability to make mortgage payments.
  • Current mortgage payments must be in excess of 31 percent of before-tax income.
  • The mortgage must have originated prior to January 1st of 2009.
  • The property must be the owner’s principal residence.
  • The loan amount must be no more than $729,750.
  • The mortgage must be guaranteed or owned by Fannie Mae or Freddie Mac.

Some of the advantages of the program are:

  • Sellers will receive preapproval of the terms of the short sale prior to placing the home on the market.
  • Lenders will have 10 days to approve or deny contracts for short sales.
  • Second mortgage holders will be eligible for payments of up to $3,000.
  • Loan servicers will be paid $1,000 to cover processing fees.
  • Investors may receive up to $1,000.
  • The home owner may receive $1,500 in moving expenses.

Finally, the new rules release borrowers from deficiency judgments requiring home owners to repay the difference between the amount received through a short sale and the original loan.

If you would like to see if you qualify for a loan modification, visit


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