Posted by: Catherine | February 11, 2010

What is HAFA? Will it make your short sale easier? Shorter? Which banks will participate?


There is a lot of talk about the “HAFA” program around the short sale world. 

Will it actually help?  Which lenders will implement it?  How smoothly will it go?  So let’s look at what HAFA is:

HAFA means Home Affordable Foreclosure Alternatives Program. 

HAFA is a program designed to provide incentives for borrowers doing a short sale (or a deed in lieu) in order to avoid foreclosure.  Servicers who participated in the HAMP (Home Affordable Mortgage Program) required to participate in the HAFA program.  For the rest, it’s voluntary.   A list of all the servicers participating in the HAMP program can be found here at the Making Home Affordable WEBSITE.   For loans owned or guaranteed by Fannie Mae or Freddie Mac, some modified HAFA guidelines will be coming out soon.

HAFA:

  • Is designed to work with the HAMP program (modifications), and is designed for those borrowers otherwise eligible for HAMP assistance, but nevertheless, unable to keep their homes.
  • Asks lenders to use the borrower financial and hardship packets submitted for the loan modification in consideration of a short sale option.
  • Is supposed to give homeowners pre-approved short sale terms prior to listing the property (this should include the minimum net proceeds they’ll accept).
  • Will require that lenders fully release borrowers from any future liability (first loans only).  This means no note, cash at close or future deficiency judgements will be allowed.
  • Can provide some financial incentives for homeowners participating in the HAFA program for short sales including up to $1,500 for relocation expenses.  (Are you surprised to hear too that there are financial incentives for the lenders and investors too? …. .Yah, I didn’t think so.)

And here’s a recap that is the one “term” sure to mess it all up.  Oh, and by the way, this HAFA program is not as easy as I tried to make it look up there in those bullet points.  The reality is that it is a very complex program with 43 pages of forms and guidelines.   Ok, here’s the guideline as copied from a recap from Realtor.org:

  • 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.
  •  

    Well that just gives us the “fine print,” or perhaps, more accurately, the “gaping hole” in which lenders will find YOUR file .  Ok, maybe not really, but just know that it won’t be as easy as it sounds, and there are going to be exceptions, and investor requirements, and other ways the lender will say no, this may not be the solution for all.  It’s perhaps a start though.  We’ll see how it goes.  The program is required to be implemented by April 5, 2010.  Some lenders not participating in HAMP , or moving out of the HAMP program, I hear too will participated to some extent, so stay tuned for more.

    Catherine Myers
    Windermere Bay Area Properties

    Walnut Creek, Concord, Clayton, Pleasant Hill, Martinez, Pittsburg, Antioch, Brentwood and surrounding communities.  Short sales and resources to avoid foreclosure.  925-683-2125

    Contra Costa Real Estate, Homes for Sale, Short Sale Help, REO, Foreclosure Homes – Contra Costa , Walnut Creek real estate, short sales, foreclosures, REO.  Call for a free consultation.


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