Home Affordable Foreclosure Alternatives (HAFA) – Information for distressed homeowners facing foreclosure.
How can HAFA help me?
HAFA was designed to assist homeowners who are unable to keep their home even with a loan modification under HAMP (Home Affordable Modification Program). Through the HAFA program, homeowners may be able to avoid foreclosure by selling their home as a “short sale” or through a process called “deed-in-lieu of foreclosure”. HAFA does not apply to VA or FHA loans. The HAFA program will end on December 31, 2012.
- Designed to assist HAMP by providing an alternative to homeowners that are HAMP eligible but still aren’t able to keep their home.
- HAMP financial and hardship information is transferrable to HAFA.
- Borrowers may receive pre-approved short sale terms from lien holder prior to listing the property.
- HAFA requires borrowers to be fully released from any future liability for the first mortgage debt and for subordinate lien holders who have received incentive under HAFA. HAFA also doesn’t allow and cash contributions, promissory notes or deficiency judgments.
- HAFA provides financial incentives to borrowers:
- $3,000 for borrower relocation assistance
- $1,500 for mortgage servicers to cover administrative and processing costs
- Up to a $2,000 match for mortgage investors for allowing a total of up to $6,000 in short sale proceeds to be distributed to subordinate lien holders.
Who is eligible for HAFA?
In order to me eligible for HAFA the borrower must meet the basic criteria for HAMP:
- Must be borrower’s principal residence which includes certain vacant properties of borrowers who have recently moved at least 100 miles for employment.
- First lien originated before 2009.
- Mortgage is currently delinquent or a default is foreseeable.
- Borrower’s unpaid principal balance is not more than $729,750.
- Borrower’s total monthly payment exceeds 31% of gross income.
What is the timeline for the HAFA program?
Loan servicers must consider HAMP eligible homeowners for HAFA within 30 calendar days after the borrower does at least one of the following:
- Homeowner doesn’t qualify for the HAMP trial period plan.
- Homeowner doesn’t successfully complete the HAMP trial period plan.
- Is delinquent on a HAMP modification plan by at least 2 consecutive payments.
- Requests a “short sale” or “deed-in-lieu”
What is the timeline for a short sale under HAFA?
- Borrowers interested in a short sale must have the servicer fill out the Short Sale Agreement (SSA) and send it to the borrower. Borrowers have 14 calendar days from the date of the SSA to sign and return to servicer. The real estate broker must also sine the SSA. The SSA gives borrowers a period of 120 calendar days to sell their home. Servicers may extend the marketing time up to 12 months.
- Within 3 business days of receiving an executed contract, the borrower or real estate agent must submit a completed Request for Approval of Short Sale.
- Within 10 business days after receiving the RASS and other required documents, the servicer must approve or deny the request.
- Upon an accepted approval of short sale, the closing must take place within a reasonable period but not sooner than 45 calendar days from the date of the sales contract unless the borrower agrees to close sooner.