I did a loan modification last year, can I now do a short sale? You can do a short sale even if you have done a loan modification. If you are one of thousands of people who did a loan modification in the past, but now find that even with the modification, you still can't keep up with the monthly payments and you owe more money on your home than it's worth, you should check to see if you are eligible for a short sale.
Additionally, if you have a non-government loan, find out if your mortgage servicer is a participant in the HAMP (Home Affordable Modification Program). The federal government provides special incentives for those servicers who participate in HAMP. Those servicers now have to participate in the Home Affordable Foreclosures Alternatives (HAFA) program and offer short sale options in lieu of foreclosures for their borrowers. On November 30, 2009, the Obama Administration released guidelines and uniform forms for the HAFA Program. In order to qualify for this program the borrower must meet the following criteria:
1. Home must be primary residence
2. First lien was taken out prior to 2009
3. Mortgage is deficient or is at risk for becoming deficient
4. Unpaid principal balance is no more than $729,750.00.
5. Monthly payment exceeds 31% of gross income
Meeting above criteria is one step in the short sale approval process. A detailed package containing your financials(w-2s, paystubs, bank statements, etc.) along with other items will be required before approval is granted by your servicer. Contact a knowledgeable Realtor who can guide you through the short sale qualification process.
The goals of HAFA are to drastically reduce the time for approval of a short sale and to make the process more uniform. The servicer's minimum net and closing costs are determined up front along with all deadlines. Moreover, the borrower is released from the deficiency judgment (1st lien) and special incentives are provided under the program for all parties (borrower, servicer as well as the subordinate lien holder). The program is scheduled to begin April 5, 2010 and ends on December 31, 2012, but check with your servicer for their exact start date.