HAFA- Home Affordable Foreclosure Alternative
What is the HAFA program?The Home Affordable Foreclosure Alternatives (HAFA) program is an extension of HAMP. HAMP has resulted in a very low percent of permanent loan modifications for homeowners who requested help so needless to say an extension to the program was needed. The HAFA Program is a government-sponsored initiative overseen by the US Treasury Department and administered by Fannie Mae assisting all Home Affordable Modification Program (HAMP)-eligible homeowners in finding a foreclosure alternative, specifically through short sales or deeds-in-lieu of foreclosure. This program is now in effect and has players from every corner of the industry- agents, lenders and technology vendors are teaming up and will be working together to automate and streamline this process and make qualified Short Sale easier to close.
The HAFA program directs lenders to assist eligible homeowners by implementing short sales or deeds-in-lieu by providing financial incentives to lenders that carry out this foreclosure alternatives through the program's guidelines. The program was introduced in part to help keep communities from being destroyed through massive foreclosures. The HAFA Program in its current state is ONLY applicable to conventional-type, non-Governmental Serviced Enterprises (non-GSE) mortgages and therefore does not apply to loans owned or guaranteed by Fannie Mae or Freddie Mac. These organizations may have plans to release their own versions of the HAFA Program. Many homeowners in areas like Peoria, Surprise, Phoenix have used the HAFA Program to find a foreclosure alternative.
Who is Eligible for the HAFA Program?
Most homeowners facing financial hardship are eligible. As a rule, if a homeowner is eligible for HAMP but cannot pay the mortgage, then he or she is eligible for an assisted short sale through a HAFA Program as a foreclosure alternative. Servicers must consider possible HAMP eligible borrowers for a HAFA Program within 30 calendar days if the borrower has met one or more of the following criteria:
- Does not qualify for a HAMP Trial Period Plan
- Does not successfully complete a HAMP Trial Period Plan
- Is delinquent on a HAMP modification by missing at least two consecutive payments
- Requests a short sale or deed-in-lieu
For a loan to qualify, it must meet the following criteria:
- The property is the borrower's principal residence
- The mortgage loan is a first lien mortgage originated on or before January 1, 2009
- The mortgage is delinquent or default is reasonably foreseeable
- The current unpaid principal balance is equal to or less than $729,750
- The borrower's total monthly mortgage payment exceeds 31 percent of the borrower's gross income
Which Lenders are Participating in the HAFA Program?
Click this link to see the lenders that have agreed to participate in the HAFA program. To check your eligibility status please contact us by filling out our online questionnaire. One of our first steps will be to determine your eligibility for the HAFA Program. If you are NOT eligible we can still assist you in the Short Sale using the traditional methods.
Incentives to Participate
US Treasury Department has put incentives on the HAFA Program to assist the lenders and the homeowners to participate. Lender will receive money to off-set their loss and homeowners will receive $3000 in relocation money.
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Old |
New as of February 1, 2011 |
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Monthly Gross Income Requirements |
Servicer had to verify id Borrower's monthly mortgage exceeded 31% of gross income |
Servicer no longer is required to verify any financial information (but still can). Borrower must still sign Hardship Affidavit. |
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Vacant Property Requirements |
Property could not be vacant or rented 90 prior to Short Sale application. Relocation was limited to 100 miles away. |
Property can be vacant or rented up to 12 months prior to Short Sale Application as long as borrower can prove property was primary residence. Relocation no longer has to be work related nor is there a mileage requirement. |
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Release of Subordinate Liens |
There was a 6% cap on proceeds servicers directed to junior lien holders up to $6,000 |
The 6% cap has been eliminated. The servicer will determine the amount or percentage of the unpaid principal balance going to each junior lien holder up to $6,000 |
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Timing for issuance of Short Sale Agreement |
If a servicer offered a HAFA to a borrower, and the borrower responded, the servicer had to issue an application within 30 days from the date of the borrower's response. |
The same still applies, but now includes borrowers that haven't been directly offered a HAFA short sale by the servicer. If an "unsolicited" borrower requests approval and is eligible, the servicer must respond in 30 days. |
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Timing for Response to Alternative Request for Approval of Short Sale |
No deadline for a servicer to reply to a Request for Alternative Short Sale. |
There is now a 30-day response requirement for a servicer to reply to an executed contract. |
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Real Estate Brokerage Commission |
6% commission cap |
6% commission cap remains, but servicers must include statement in the SSA that they will not deduct 3rd party vendor fees from agents commission. |
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Alternative Deed-in-Lieu Programs |
Alternative Deed-in-Lieu programs that allow for repurchase of the property after a brief rental period were not eligible for HAFA incentives. |
Alternative Deed-in-Lieu programs now qualify with conditions. |
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Borrower Notices |
Borrowers who request a short sale who have not been previously evaluated for HAMP (loan Mod) must receive written notice from the servicer regarding the availability of HAMP and give borrower 14 days to respond. |
The provision remains the same but clarifies that the servicer can still qualify the borrower's eligibility for HAFA while borrower is considering HAMP (loan mod). |
More information
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