DC short sales were streamlined by the federal Home Affordable Foreclosure Alternatives progam or “HAFA”. HAFA improved relations between banks and property owners trying to sell their property through a short sale by providing incentives to both borrowers and lenders to work together to avoid foreclosure and help to speed up the process.
One of the incentives was tax relief. HAFA extended the Mortgage Forgiveness Debt Relief Act that helped homeowners by saying that money forgiven in a short sale is not taxable.
Unfortunately HAFA and its incentives were set to expire at the end of this month. For many months many real estate professionals have been waiting anxiously to see if the program would be extended.
Then on Monday, the Treasury stated that it plans to announce the new rules shortly. These changes will have a big impact on DC short sales.
Many Changes For DC Short Sales Anticipated.
Though not all of the details are known, the new rules will:
- Streamline approvals by establishing new “pre-determined” harship categories;
- No longer require several of the current HAFA documents
- Require new condensed timelines to speed up approvals
- Increase incentives to 2nd trusts, to gain more approvals
- New relaxation of “flipping rules” to allow investor purchasers to sell the properties in 30 rather than 90 days
All of these changes will be very positive for DC Short Sales. We will give more details after the announcement.