New Short Sale Program – HAFA

The U.S. Treasury Department rolled out the Home Alternative Foreclosure Alternative (HAFA) in April 2010.  This program is an add-on to the existing Home Alternative Modification Program (HAMP) that is supposed to guarantee a faster short sale approval and closing while guaranteeing the homeowner that they will not come after them for a deficiency or ask them to contribute either cash and/or a promissory note in order to obtain a short sale approval.  The HAFA program is supposed to dramatically decrease the time it takes for a lender to issue a short sale approval.  The traditional short sale takes anywhere from 60 to 180 plus days, which is frustrating to everyone involved.  HAFA requires that the seller calls the lender before listing the property in order to see if they qualify for HAFA.  If they qualify, the lender determines the listing price of the home and the homeowner is instructed to list the property with a Realtor.  Once a buyer is found and a contract is submitted, the lender has 10 days to approve the contract.  I have yet to complete a HAFA deal, but I am sure HAFA will become very prominent in the real estate world and look forward to a smoother transaction for my buyers and sellers.

HAFA is set up as an alternative to HAMP.  Lenders would like to keep homeowners in their homes and would prefer to modify their mortgage in lieu of a short sale, but if the homeowner does not qualify for HAMP, lenders must offer a short sale in writing to the borrower within 30 days.  Borrowers will receive a Short Sale Agreement and must respond to the lender within 14 days.

Why go HAFA?

• Quick response from lenders
• Borrowers will not be asked to contribute to short sale and lenders will not come after them for the deficiency.
• Borrowers will receive $3000 that will help with their move.
• 2nd lender is required to release borrower and has to accept 1st lender terms and a maximum of $6000.

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Tags: borrowers, buyers, foreclosure, HAFA, HAMP, sellers, short sale