What is HAFA?

Home Affordable Foreclosure Alternatives

is the government program for individuals and families having

difficulty selling their homes. This US Treasury Department

program took effect in April 2010 to aid the housing market.

HAFA is called "the government short sale" and has benefits

for the homeowner.

A short sale is the sale of a property for less than the mortgaged amount. Homeowners struggling to sell their homes may need to choose this option. But the lender has to agree that a moderate loss is better than foreclosure. This is traditionally a very long and cumbersome process. An offer that is made on this property may not be accepted by the lender and it takes months to determine this information. Due to the lengthy process, the home frequently ends up in foreclosure with the owners still liable for the deficiency of the loan.

Through HAFA, the acceptance offer amount on the property can be determined before listing the property, thus reducing the time for an otherwise long process. Financial incentives are offered to the borrowers and the homeowners.

There are certain qualifications that must be met. The loan must have been taken out before January 1, 2009. It must be delinquent and have a loan balance of less than $729,750. The servicer does not have to check seller's income or determine a debt-to-income ratio.

HAFA also aids in a deed-in-lieu of foreclosure. A deed-in-lieu is when the home owner gives the property back to the mortgage company voluntarily.

HAFA does not apply for Fannie Mae and Freddie Mac loans. These organizations have their own requirements.

The website www.makinghomeaffordable.com provides valuable information to this program.

The best features of this program are relocation assistance for the seller to the tune of $3,000. Also the bank cannot further serve a deficiency suit. The bank also pays the re-listing fees.

Provisions of HAFA

Offers $3,000 for relocation.

Servicers receive $1,500.

Investors can earn a 1 to 3 income ratio to allow proceeds to other liens.

Alternative for those who are eligible for HAMP, but unable to keep their home.

Application uses information collected in the loan modification application.

Short sale terms collected before the borrower lists the property.

Future liability is released from borrowers on the home.

Standard documents and deadlines are used in this process.

HAFA was designed to work with the HAMP (Home Affordable Modification Program), another government program. To be eligible for HAFA, homeowners must first apply for HAMP loan modification. Owners who don't qualify for a modification can qualify for HAMP.

Other requirements include:

Property must be principal residence.

Mortgage must be taken out before Jan. 1, 2009.

Fannie Mae or Freddie Mac must guarantee loan.

Default is inevitable.

Hardship must be demonstrated.

Unpaid loan principal does not exceed $729,750.

This government program is definitely worth the research if you are having difficulty in selling your home and facing foreclosure.