Short Sales Get Government Incentives
Short sales aren’t hassle-free, however you’ve got the government backing you. The Home Affordable Foreclosure Alternatives (HAFA) program provides financial incentives for lenders and borrowers to avoid foreclosure through short sales. It’s geared to homeowners who can’t keep their home with the help of a loan modification.
Advantages of a Short Sale Process
You can:
Be a homeowner again more quickly with a short sale in your past than with a foreclosure. Fannie Mae guidelines help you qualify for a new mortgage in as little as two years after a short sale, as opposed to up to seven years after a foreclosure.
Have more time to make relocation plans and save money than with a deed in lieu. A short sale may take four to 12 months. A deed in lieu of foreclosure arrangement typically requires you vacate your home within 30 to 60 days of signing, according to real estate attorney Lance Churchill.
Receive up to $3,000 from your lender for moving expenses at the time of closing of a HAFA short sale or a HAFA deed in lieu of foreclosure. Relocation funds are part of the incentives of HAFA, but not necessarily for other short sale or deed in lieu programs of the lenders.
Help your community’s home values. Because the lender often receives a higher amount of the remaining loan balance than it would from the sale of a home after a foreclosure, short sales help support home values in the surrounding community.
Disadvantages of a Short Sale
Your credit score will take a severe hit. But that would happen anyway with a foreclosure. Fair Isaac, creator of the FICO score, says foreclosure and short sales have virtually identical impacts on your credit score. VantageScore, a company that has created a credit score model for consumers, says a short sale will lead to only a marginally lighter hit when compared with foreclosure.
If you would like more information on a Short Sale and how it might help you avoid a foreclosure Contact the Sullivan & Sullivan team.
