Since much of the work I do involves clients who want to keep their home, I don’t often discuss the benefits of short sales. For many clients, a short sale can be the best option to protect credit and ensure long-term financial health. A short sale is the process where a bank agrees to sell a home for less than is owed on the property. In the current depressed real estate market, many homes are worth less than is owed. As a result, a homeowner must do one of two things to sell their home. First, they can pay the difference of what is owed on the loan and the value of the home upon selling the home. The other option is that the seller must obtain permission from the lender to sale the home for less than the lender is owed.
There are numerous reasons why a lender would accept a short sale when they are owed more on a loan. The primary reason is that a short sale likely saves the owner of the loan more money than the cost of foreclosing and reselling the property. Because short sales benefits both sellers and banks, the Making Home Affordable Program has created a program which streamlines the short sale process, ensures that borrowers will not owe any money after the sale, and provides money for relocation assistance. The HAFA program (Home Affordable Foreclosure Alternative) provides qualified borrowers with assistance with either a short sale or deed-in-lieu of foreclosure. To qualify, you have to have lived in in the home for the last 12 months, the home must be owner-occupied, the first mortgage must be for less than $729,750, the mortgage must have been obtained before January 2, 2009, and you must have a financial hardship. Most lenders will require financial documentation including paystubs, bank statements, and a short application in order to qualify.
If you do not qualify for HAFA, all banks offer alternative short sale programs for borrowers. In some cases, lenders will provide financial assistance to help with relocation assistance even if you do not qualify for HAFA. If you are having trouble paying your mortgage or need to relocate, contact De Novo Law Firm today at (877) 346-7411 to discuss your options. Our office can discuss your legal options and connect you with a qualified short sale broker to sell your property.