In either cases, HAFA offers benefits that makes the transition as favorable as possible:
You can get free advice from HUD-approved housing counselors and licensed real estate professionals.
Unlike conventional short sales, a HAFA short sale completely releases you from your mortgage debt after selling the property. This means you will no longer be responsible for the amount that falls “short” of the amount you still owe. The deficiency is guaranteed to be waived by the servicer. In a HAFA short sale, your mortgage company works with you to determine an acceptable sale price. HAFA has a less negative effect on your credit score than foreclosure or conventional short sales. When you close, HAFA provides $3,000 in relocation assistance and most mortgage companies will give $10,000 for moving expenses.
It can take up to four months for your lender to foreclose after you stop making your mortgage payments.
A lender must contact the borrower to asses the borrower’s financial situation. The lender must inform the borrower of the right to meet with the lender within 14 days.
A lender may file a notice of default 30 days after contacting the borrower. The default must be filed, and mailed to the borrower within 10 business days.
3 months after the notice of default, the lender may record a notice of trustee’s sale stating all information about the upcoming sale.
Up to 5 days before the trustee’s sale the borrower may reinstate the loan by paying the missed payments plus allowable costs.
Trustee’s sales can take place 20 days after the posting of notice of sale. At the trustee’s sale the property is sold to the highest bidder.