Monday Market Myth: HAFA $6k Cap on 2nd Liens

Myth: A HAFA short sale seller will receive lender approval even if the junior liens are over $6,000.

False: If a seller wants to have a short sale approval in the HAFA program, the maximum amount the 1st lien holders will pay the junior liens is $6,000 maximum.  If the liens are greater or cannot be negotiated, then the short sale will fail.  Liens should be paid according to priority such as tax liens, and most lenders require the lien holders to release liability in writing.  HAFA provides the a relocation assistance of $3000 to the homeowner, so they want to make sure other lien holders do not try to obtain the funds.  Plus any money transferred during the transaction must be disclosed on the HUD-1 Settlement Statement.

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