HAFA SHORT SALE

Home Affordable Foreclosure Alternatives Program (HAFA)

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.

Home Affordable Foreclosures Alternatives Program: Guidelines and Forms 

NEW SENATE BILL 458 INSTRUCTS LENDERS THEY MUST REPORT SHORT SALES AS "PAID IN FULL"

HAFA Short Sale New Guidelines Update 2011

HAFA Short Sale Update - Some requirements removed.

The Home Affordable Foreclosure Alternatives Program (HAFA) - Policy Update of December 28, 2010 has some improvements to the original guidelines that may now pave the way for more short sales to get sold in 2011.  Because so far across the nation only approx 700 HAFA Short Sales have been done.

Here are some of the changes:

Monthly Gross Income

With respect to HAFA eligibility, servicers are no longer required to verify a borrower's financial information or to determine if the borrower's total monthly mortgage payment exceeds 31 percent of the borrower's monthly gross income. Servicers must continue to verify the borrower's hardship by obtaining a signed Hardship Affidavit or Request for Modification and Affidavit (RMA). Notwithstanding the foregoing, each servicer mayinclude a requirement in its HAFA Policy that borrowers provide updated financial information to evaluate the borrower.

Vacant Property

To be considered for HAFA, the property currently must be or recently must have been the borrower's principal residence. A property that has been vacant or rented to a non-borrower for not more than 12 months prior to the date of the Short Sale Agreement (SSA), Alternative Request for Approval of Short Sale (Alternative RASS) is eligible for HAFA, so long as the borrower provides documentation that the property was such borrower's principal residence prior to relocation and such borrower has not purchased a one- to four-unit property during the 12-month period prior to the date of the SSA, Alternative RASS. The borrower's reason for relocation does not need to be connected to re-employment or transfer of employment. Also, there is no longer a minimum distance requirement. Servicers are not required to verify the number of miles the borrower moved from the property.

Timing

No later than 30 calendar days from the date of receipt from the borrower of an executed sales contract, Alternative RASS, and a signed Hardship Affidavit or RMA, the servicer must communicate approval or disapproval of the sale or provide a counter offer on the Alternative RASS. 

What is HAFA?

The program will help homeowners who are unable to keep their home under the Home Affordable Modification Program (HAMP).  (Meaning they can't or didn't get a Loan Modification)

A borrower may be able to avoid a foreclosure by completing a short sale or a deed-in-lieu of foreclosure  under HAFA.

The guidance and forms released on November 30 do not apply to loans owned or guaranteed by Fannie Mae or Freddie Mac. Those enterprises will issue their own HAFA guidance and forms.

Who is eligible?

The borrower must meet the basic eligibility criteria for HAMP:

Principal residence.  (you live in the house)

First lien originated before 2009.

Mortgage delinquent or default is reasonably foreseeable.  (Hardship)

Unpaid principal balance no more than $729,750 (higher limits for 2 to 4 unit dwellings).

Borrower's total monthly payment exceeds 31% of gross income.  (no longer required)

Benefits of a HAFA Short Sale:

Sell your home for less than you owe on the mortgage!

Avoid foreclosure and its effect on your credit!

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

No obligation to repay the deficiency!

Qualify for a new loan in as little as 2 years!

Receive $for relocation expenses!

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

HAFA Short sale is available in San Diego, Orange County, Riverside County, Los Angeles, Santa Barbara, San Bernardino and other California cities!

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