Home Affordable Foreclosures Alternatives Program: Guidelines and Forms 

HAFA provides incentives in connection with a short sale or a deed-in-lieu of foreclosure (DIL) used to avoid foreclosure on a loan eligible for modification under the HAMP program. Servicers participating in HAMP are also required to comply with HAFA. A list of servicers participating in HAMP (including HAFA) is available at: www.makinghomeaffordable.com/contact_servicer.html.

HAFA Provisions

• Complements HAMP by providing a viable alternative for borrowers (the current homeowners) who are HAMP eligible but nevertheless unable to keep their home.
• Uses borrower financial and hardship information already collected in connection with consideration of a loan modification.
• Allows borrowers to receive pre-approved short sales terms before listing the property (including the minimum acceptable net proceeds).
• Requires borrowers to be fully released from future liability for the first mortgage debt (no cash contribution, promissory note, or deficiency judgment is allowed).
• Uses standard processes, documents, and timeframes/deadlines.
• Provides the following financial incentives:
  • $3,000 for borrower relocation assistance;
  • $1,500 for servicers to cover administrative and processing costs;
  • Up to $2,000 for investors who allow a total of up to $6,000 in short sale proceeds to be distributed to subordinate lien holders, on a one-for-three matching basis.
• Requires all servicers participating in HAMP to implement HAFA in accordance with their own written policy, consistent with investor guidelines. The policy may include factors such as the severity of the potential loss, local markets, timing of pending foreclosure actions, and borrower motivation and cooperation.

$18,000 IN COMBINED HOMEBUYER TAX CREDITS FOR A LIMITED TIME

Californians have a brief window of opportunity to receive up to $18,000 in combined federal and state homebuyer tax credits.  To take advantage of both tax credits, a first-time homebuyer must enter into a purchase contract for a principal residence before May 1, 2010, and close escrow between May 1, 2010 and June 30, 2010, inclusive.  Buyers who are not first-time homebuyers may use the same timeframes to receive up to $16,500 in combined tax credits if they are long-time residents of their existing homes as permitted under federal law, and they purchase properties that have never been previously occupied as provided under California law.

Under the federal law slated to soon expire, a first-time homebuyer may receive up to $8,000 in tax credits, and a long-time resident may receive up to $6,500, for certain purchase contracts entered into by April 30, 2010 that close escrow by June 30, 2010.  Additionally, under a newly enacted California law, a homebuyer may receive up to $10,000 in tax credits as a first-time homebuyer or buyer of a property that has never been occupied.  The new California law applies to certain purchases that close escrow on or after May 1, 2010 (see Cal. Rev. & Tax Code section 17059.1(a)(4)).  California law generally allows buyers of never-occupied properties to reserve their credits before closing escrow, but buyers seeking to combine the federal and state tax credits will not be able to satisfy the timing requirements for such reservations (see Cal. Rev. & Tax Code section 17059.1(c)(1)(A)).  Other terms and restrictions apply to both tax credits.

For more information, C.A.R. offers a Homebuyer Tax Credit Chart with a side-by-side summary of the federal and California laws.  C.A.R. also offers a legal article entitled Homebuyer Tax Credit Update.

Feel free to call me at 408-497-5283 for more info!

The median price of the previously owned, single-family houses that changed hands in Santa Clara County last month was $510,500, up from $421,000 February 2009, according to MDA DataQuick. Resale condominiums posted a median price of $315,000, up 16 percent from $271,500 in February 2009.

The trend was the same in San Mateo County, where the median price of houses increased 13 percent year over year, and sales climbed 5 percent. The median house price was $600,000, up from $531,000 last year. The median condo price in that county was $330,000, down 13 percent from February 2009.

The significant increases in median price do not mean that every home has enjoyed double-digit appreciation over the past year. In fact, the values of some homes are still falling. But median prices have increased compared with last year in part because of a change in the mix of which homes are selling, DataQuick said.

More homes in the $500,000-and-up price range sold last month than in February 2009, for example, increasing from 24 percent of all Bay Area home sales in February 2009 to 32 percent last month.

Bay Area-wide, home sales of all types — including new and resale houses and condos — were slightly down in February compared with a year earlier, falling 0.9 percent, with sales dropping significantly in Contra Costa, Napa and Solano counties. But the median price of houses rose nearly 25 percent to $370,000 for the nine-county region.

The median price marks the halfway spot, meaning half the homes sold for less than the median figure, and half for more. DataQuick gathered its information from public records of sales that closed in February, meaning many of the transactions began in January or earlier.

"Sales and price data remain choppy," DataQuick President John Walsh said in a statement released with the data. "The market remains fundamentally off-kilter. There's still relatively little lending going on in the upper price ranges, and little adjustable-rate financing, which has been vital to the Bay Area."