Home Affordable Foreclosure Alternatives Program (hafa)

HAFA - Will this assist us in selling short sales

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In my opinion for some banks and negotiators, yes. It seems as if the response time is getting better, bank negotiators are becoming more lenient and friendly and ultimately working for a common goal. This is not to say we do not have our bad days and uneventful lenders. However, we usually come out ahead with persistent and aggressive work on our behalf to obtain a successful short sale.

In 2009, the Treasury Department introduced the HAFA program to provide a viable option for homeowners who are unable to keep their homes through the existing Home Affordable Modification Program (HAMP). The HAFA program takes effect on April 5, 2010-although some servicers may implement it sooner, if they meet certain requirement--and sunsets on December 31, 2012.

HAFA Provisions

Complements HAMP by providing a viable alternative for borrowers (the current homeowners) who are HAMP eligible but nevertheless unable to keep their home.

Uses borrower financial and hardship information already collected in connection with consideration of a loan modification.

Allows borrowers to receive pre-approved short sales terms before listing the property (including the minimum acceptable net proceeds).

Requires borrowers to be fully released from future liability for the first mortgage debt (no cash contribution, promissory note, or deficiency judgment is allowed).

Uses standard processes, documents, and timeframes/deadlines.

Provides the following financial incentives:

$3,000 for borrower relocation assistance;

$1,500 for servicers to cover administrative and processing costs;

Up to $2,000 for investors who allow a total of up to $6,000 in short sale proceeds to be distributed to subordinate lien holders, on a one-for-three matching basis.

Requires all servicers participating in HAMP to implement HAFA in accordance with their own written policy, consistent with investor guidelines. The policy may include factors such as the severity of the potential loss, local markets, timing of pending foreclosure actions, and borrower motivation and cooperation.

by: Steve Daria

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