Wow, there's a lot of room for speculation here. I am not a licensed attorney so do not take any of this as council and merely a thoughts and experiences posted on a blog.
HAFFA was designed to help homeowners who are unable to retain their home under the Home Affordable Modification Program (HAMP), and provide incentives in connection with short sales and deeds-in-lieu of foreclosure.
The clause relating to Deficiency gets grainy. HAFFA requires borrowers to be fully released from future liability for the first mortgage debt and, if the subordinate lien holder receives an incentive under HAFA, that debt as well (no cash contribution, promissory note, or deficiency judgment is allowed). So this opens up even more questions.
Question: Does the seller even qualify for HAFFA? Is the home owner occupied or was it vacant? If the home was vacant, this home could be looked at as not being the sellers primary residence.
Question. Is there a 2nd mortgage? Without even having to contact the listing agent, tax records could tell your agent what the last sale of the home went for. Not always, but usually if the loan amount was 80 percent of the sale amount, chances are the home sold with an 80/20 loan. There could be a 2nd loan that is not getting an incentive that would not work under HAFFA. If that is the case, the 2nd could retain the right to pursue a deficiency from the seller.
Before I go further, ask your agent if they attended last months town hall meeting with Bank of America. Bank of America sent an executive to help agents with their questions and concerns regarding current, past and future escrows with Bank of America. If youâ€™re agent did not attend, they could gain a wealth of information from those who attended with your questions. Have them ask their broker or others who attended.
I attended because I was representing a seller with a short sale who wanted to make sure any deficiency that could arise would be removed before finalization of the sale. I learned bank of America would not guarantee in words a deficiency would be removed. They wanted to reserve the right. In the execâ€™s words; â€œIf we find out the seller owns an RV, we would want the opportunity to suggest they sell it and work a little harder on the dealâ€.
Thereâ€™s a world of scenarios out there that can hold up this deal just revolving around the deficiency concerns of the seller. Equator was simply an online program that has been integrated with processing bank owned homes. At the beginning of this year it was fine tuned to help with speeding up the short sale process. If the seller can let go of the deficiency concerns, you have a good chance to move forward. The seller may entertain the idea of filing BK in the future, giving you happier days ahead in your new home.
Short sales are embarrassing for sellers and difficult to understand for both parties. To learn more about short sales and HAFFA, I suggest the site below for government links and more information.