Home Affordable Foreclosure Alternative Program (HAFA)

The Treasury Department recently released guidelines and forms for its new Home Affordable Foreclosure Alternatives (HAFA), which is part of the Home Affordable Modification Program (HAMP), designed to streamline and create incentives for short sale transactions for lenders and borrowers. This new program is effective April 5, 2010 and goes through December 31, 2012. HAFA is a complex program, with 43 pages of guidelines and forms, designed to simplify and streamline short sales and deeds-in lieu of foreclosure.

 

 

 

1. The property must be the homeowner’s principal residence;

2. The mortgage is a first deed of trust dated prior to January 1, 2009;

3. The loan is delinquent or a default is reasonably foreseeable;

4. The current loan balance is less than $729,750.00; and

5. The borrower’s total monthly mortgage payments exceed 31% of the borrower’s gross income.

2. Prohibits servicers from requiring a reduction in the real estate commission agreed upon in the listing agreement (up to 6%).

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

4. Uses standard processes, documents, and timeframes/deadlines.

5. Financial incentives: $1,500 for borrower relocation assistance; $1,000 for servicers to cover administrative and processing costs; and up to $1,000 for investors for allowing a total of up to $3,000 in short sale proceeds to be distributed to subordinate lien holders (on a one-for-three matching basis).

For a more detailed look at the HAFA program, please visit the U.S. Treasury’s website at

:   The HAFA program provides for the following:www.ustreas.gov.

:   The HAFA program provides for the following:www.ustreas.gov.