There have been discussions regarding the government’s new HAFA program and HUD’s Fair Housing Act. One view is that the HAFA program breaches the Fair Housing Act because it is discriminatory against people who would like to sell their home as a short sale, but cannot demonstrate a hardship. The most recent article I’ve read said this.
“HAFA will consider a stream line short sale approval and process for borrowers who have proven their hardship and financial situation already collected in consideration of a loan modification. I believe that an increasing number of homeowners holding “A”-paper, fixed rate mortgages with adequate earning ability will attempt to participate in the HAFA program due to their negative equity position and desire to move.
Loss of equity is not an acceptable basis for “hardship”. If these individuals are declined for HAMP due to an unproven hardship will they also be declined for the HAFA short sale process? I assume so based on the outlined criteria for HAFA.
That brings me to my point. The government appears to be showing bias towards weaker individuals by allowing them the ability to move from one location to another while eliminating the threat of repayment of the forgiven debt to boot.
The “stronger” individuals I referred to may be forced to remain in their current homes with no ability to move unless they can pay off the full principal balance of their mortgage with no assistance.”
There are lenders that will consider a short sale for a borrower who cannot demonstrate a hardship and grant a release of the lien. However, in most cases they will not waive the deficiency balance and sometimes ask for an unsecured promissory note.
For questions regarding short sale approvals and what constitutes a hardship, call our office at 941-954-9991
To read the complete article visit: http://activerain.com/blogsview/1518095/is-hafa-s-program-a-breach-of-hud-s-fair-housing-act
Written and posted by Karen Gagliardi, Business Development Coordinator with Berlin Patten, PLLC