We are often asked by prospective clients who are facing foreclosure about their short sale options. One of the most popular short sale options is the Home Affordable Foreclosure Alternatives (“HAFA”) program offered by the U.S. Departments of the Treasury & Housing and Urban Development.
One of the great advantages of the HAFA program is that a HAFA short sale completely releases you from your mortgage debt after selling the property. This means that after completing a HAFA short sale, you are no longer responsible for the deficiency owed to the bank after the short sale proceeds are applied towards your mortgage debt. The deficiency is guaranteed to be waived by the servicer. HAFA also offers a $3,000.00 moving expenses incentive to selling homeowners.
Until recently, the HAFA program was only available to borrowers selling their primary home. However, recent changes now allow a homeowner to qualify for the HAFA program when selling investment property, and in addition, if the property is occupied by a tenant, the tenant can receive the $3,000.00 incentive to assist with their costs of moving and securing new housing.
Homeowners must keep in mind that short sale transactions, even when the deficiency is waived, can lead to tax consequences.
If you would like more information about HAFA, your potential eligibility for HAFA, and/or your general short sale options, visit http://www.makinghomeaffordable.gov or contact a real estate attorney.