HAFA (home affordable foreclosure alternative program) no longer requires income verification for "hardship" (investment, mortgage)

[aneftp]

Real Estate & Housing: Treasury Drops Short Sale Requirements - CNBC

Of particular note in this article is a recent change to the program last week:

"A recent report from the folks who oversee the TARP (the Congressional Oversight Panel) said that the Treasury has spent just $4.3 million on HAFA for 661 short sales. So Treasury, last week, decided to change the rules a bit:

HAFA no longer requires that servicers verify the borrowers finances
HAFA no longer requires servicers to determine if the borrowers monthly payment is higher than a 31 percent debt-to-income ratio.
HAFA no longer requires second-lien holders to agree to accept 6 percent of the unpaid principal balance owed them, up to $6,000. Servicers now decide who gets paid how much, with a cap still at $6000.
HAFA now requires borrowers seeking a short sale get an answer/agreement within 30 days."


This has got to be a joke by our US Govt. So basically they are going to let any underwater borrower sign a piece of paper attesting to the fact that they face "financial hardship" without verifying any income/investment accounts to prove that hardship.

So you have the very same borrowers who essentially lie on their original mortgage application about their income to obtain homes they could never afford.

Now the government is letting the same borrowers get off the hook on an underwater mortgage by again not verifying income to actually prove financial hardship so they can short sale their homes in a quick manner.

Hmmm... I wonder how underwater borrowers will game the system now that the US Treasury has implemented this ruling.

Plus the other key is that the US Govt won't let 2nd and 3rd lien holder even have a say on the matter. The first lien calls all the shots and "gives them up to $6000 of the US Tax payers money" to go away.

And guess what? If these same underwater homeowners short sale their homes, they probably get to buy another home via another government backed mortgage within 2-3 years.

[2bindenver]

This does not apply to fannie or freddie loans (yet.)

[aneftp]

Originally Posted by 2bindenver

This does not apply to fannie or freddie loans (yet.)

I know. But Fannie/Freddie are essentially government entities at this time so the key word is "yet" in terms of this program applying.

This is going to open up Pandora's box. I'm sure it's only going to take weeks before we start seeing ads from companies trying to lure people into taking advantage of this new Treasury ruling.

Extremely sneaky of the US Govt since they know it's not popular to reduce principal on mortgages and this way (with no income verification) is a way around to let people legally short sale their homes without any real consequences.