QUESTION: Does the FHA limit the number of homes it will finance for one borrower?

ANSWER: HUD says its “regulations and policies state that a real estate owner/entity should not be allowed to rapidly accumulate FHA insured properties that clearly and collectively constitute a multifamily project. In general, a borrower may not have an interest in more than seven rental units (FHA, VA, conventional or owned free and clear of any mortgage) in the same subdivision or contiguous area.”

In practice, many lenders “layer” FHA requirements with their own standards and will not offer FHA financing to investors with more than seven units. Speak with local loan officers for specifics.

QUESTION: What’s HAFA, and how does it impact foreclosures?

ANSWER: HAFA – the Home Affordable Foreclosure Alternatives program – is a new government anti-foreclosure plan that began April 5.

The purpose of the HAFA program is to help owners sell their homes with short sales, a way to avoid a foreclosure. With a short sale the lender agrees to take a loss on the loan, an option that only makes sense to lenders if a foreclosure would be more costly. Under HAFA, lenders must first get a broker’s price opinion or appraisal to estimate the value of the property and then tell owners the price they would be willing to take.

The government does not require lenders to offer a discount, but HAFA speeds the short-sale process by having a known target price for buyers and investors to consider and then requires lenders to respond within 10 days when a qualifying offer is received. This compares with the old system where no one knew what price a lender might accept and lenders had no obligation to promptly respond to a buyer’s offer.

The government chips in up to $1,000 for servicers for each HAFA sale, $1,500 for home sellers and as much as $1,000 for loan owners.

For specifics, speak with a HUD-approved housing counselor and your lender.

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Need real estate advice? Peter G. Miller would like to hear from you. Send your questions to peter@ctwfeatures.com. Due to the volume received, not all letters may be answered.