HAFA What? Understanding Home Affordable Foreclosure Alternatives

How are HAFA short sales different? 

In 2009, the Treasury Department introduced the HAFA program to provide a viable option for homeowners unable to keep their homes through the existing Home Affordable Modification Program (HAMP). HAFA is the Home Affordable Foreclosure Alternatives offered through the government's Making Home Affordable Program. It's a continued effort to help more underwater sellers to streamline the complicated short sale process. The HAFA program began in April of 2010, has been extended through December 31, 2013.

Let’s examine the differences between traditional short sales and HAFA short sales.

A short sale happens when a lender accepts the sale of a property for less than the full amount owed. Prior to HAFA, it was no secret that attempting to sell short was a lengthy and uncertain process that sometimes took several months, required a boatload of paperwork and lots of effort.   

With traditional short sales, homeowners often listed their home for sale with no idea of what the lender would accept. Under HAFA, borrowers receive preapproved short sale terms from the lender prior to putting the home on the market. The updated HAFA short sale rules establish an easy-to-understand process with predefined steps that make it easier for everyone to understand.

The benefits of a HAFA short sale: 

■ A HAFA short sale completely releases you from your mortgage debt after selling the property. This means you will no longer be responsible for the amount that falls “short” of the amount you still owe. The deficiency is guaranteed to be waived by the servicer. This is a big deal.
■HAFA has a less negative effect on your credit score than foreclosure or conventional short sales.
■When you close, HAFA may provide $3,000 in relocation assistance.
■Servicers must respond within 45 calendar days after short sale contracts are received.

What are the HAFA requirements?

■Property must be your principal residence.
■Mortgage was originated before Jan. 1, 2009.
■Mortgage is owned or guaranteed by Fannie Mae or Freddie Mac.
■Borrower is delinquent or default is foreseeable.
■You have a financial hardship that you can document.
■Unpaid principal does not exceed $729,750.

If you are a Rhode Island homeowner struggling with your monthly payment, you have options. Please contact me if you have questions about short sales or if you need help determining if a HAFA short sale can benefit you.