An Investor Can Do a HAFA Short Sale

This week I am working on listing several investor-owned short sales in Sacramento, one of which will be a HAFA short sale. People think that an investor — a non-owner occupant — can’t do a short sale, but an investor can do a short sale. An investor can even qualify for a government short sale program such as the HAFA short sale, or my very favorite streamlined type of short sale: the Bank of America Cooperative Short Sale. Unfortunately, though, the HAFA Supplemental from last June removes the seller’s incentive portion, the $3,000 cash for a short sale that typically goes to the seller, so there’s not much of a reason to do a HAFA short sale for an investor in California. You have to live in the property to get the $3,000. Which means the tenant gets the cash.

There is a big reason to do a HAFA from a bank’s point of view. The bank gets paid from the government to do a HAFA. You might think so what, the money is insignificant. What is it? $1500? Until you stop to consider that $1500 times 1,000 short sales is one and a half million dollars. Put another way: $1500 times 10,000 short sales is $15 million. You wonder why Bank of America is pushing the HAFA short sale? Besides the National Mortgage Settlement, there’s that $15 million multiplied over and over. You can’t get past the first stage in Equator until the seller talks with the bank about a HAFA.

But not every HAFA is a nightmare to do. Some you’d rather poke out your eyeballs, some not. Sometimes, it is necessary to do a HAFA because a regular short sale has too much scrutiny. The government continually changes how it handles its HAFA short sales. I am a CHS, a Certified HAFA Specialist. I paid attention in class. It used to be that the investor needed a definite hardship to do a HAFA, but that’s not necessarily true anymore. I suspect part of the HAFA process was overhauled because nobody was doing them. People were shunning the HAFAs because the restrictions were difficult to meet. But they’ve loosened up.

It used to be you had to live in the home, and now you don’t. It used to be that the mortgage payment had to exceed 31% of your gross monthly income, and now it doesn’t. It used to be that you had to show an extreme financial hardship, detailed in your hardship letter and documented by tax returns, and now you don’t. It used to be you couldn’t have large sums of cash in the bank and now it doesn’t matter. I had a client complete a Chase HAFA short sale, and he supplied bank statements that showed $80,000 in his savings account. It wasn’t an IRA or a retirement account, it was cash. His financials reflected disposable income. Yet, the government gave him $3,000 and Chase approved his short sale. Yes, a Chase Bank short sale with no hardship.

If you’re worried that you don’t have much of a hardship, and your lender is Chase Bank or Bank of America, you can probably do a HAFA short sale. Investor guidelines will dictate. You just gotta have the story. I find that Wells Fargo will do strategic short sales as well as long as the investor is delinquent. Although, as a Sacramento short sale agent, it is against the law for me to tell an investor or any seller to stop making a mortgage payment. I can’t give legal advice nor suggest a seller become delinquent. I am required to say if a seller stops making a mortgage payment, a seller could lose his or her home. But if you’re gonna lose the house anyway, what the hey.