The Basics

• CalHFA is not a direct lender. It works with approved private lenders that qualify borrowers and originate the mortgage loans. CalHFA then purchases loans that meet its requirements.
  
  CalHFA provides first and second mortgages, including those that act as down payments for home purchases. All loans must be repaid to CalHFA upon the sale or refinance of the home with proceeds from the transaction. The first step in selling is to order a payoff statement from the mortgage servicer, which details the amount due and payable at the point of sale.
  
  

Types

• CalHFA borrowers can sell the home that secures their loan through a traditional sales process in which proceeds generated are sufficient to cover the full balance owed. In the event proceeds from the sale fall short of the balance required to pay the loan in full, CalHFA may agree to a short sale in which the proceeds generated act as payment in full.
  
  

Considerations

• The sale of a home secured by a CalHFA mortgage may be subject to the Federal Recapture Tax, a cost paid on Mortgage Revenue Bond programs. It taxes a portion of the gain made from the sale and often amounts to little or no money at all. If owed, the borrower pays it to the Internal Revenue Service after selling the home as part of his federal income taxes for the year in which the home is sold, according to CalHFA.
  
  To qualify for a short sale, the borrower must continue occupying the home as his principal residence until the home sells. The home must be listed on the market for no fewer than 90 days, and the borrower must not be in the process of modifying his loan while attempting to sell.
  
  

Short Sales

• Borrowers who qualify for a short sale to avoid foreclosure must demonstrate an inability to repay the debt. They must submit a hardship package to their lender, which includes information about their income, debts and assets and an explanation of their financial situation as well as an application to participate in the program. Borrowers must contact their loan servicer or CalHFA to request short sale assistance. The CalHFA Loss Mitigation unit's toll-free telephone number is (877) 552-4839.