Home Affordable Foreclosure Alternative Program (HAFA)

On April 5, the Treasury Department implemented a new program called The Home Affordable Foreclosure Alternatives Program, known as HAFA.  The program is designed to help owners who are unable to retain their home under the Home Affordable Modification Program (HAMP).  While the first priority is to keep families in their homes, where this is not possible with a loan modification, they may be able to avoid foreclosure by completing a short sale or a deed-in-lieu of foreclosure (DIL) under HAFA.

The Treasury Department guidelines and forms, updated on March 26, 2010, do not apply to loans owned or guaranteed by Fannie Mae or Freddie Mac.  Those enterprises will issues their own HAFA guidance and forms.  FHA and VA are not participating in HAFA, because they have their own short sales programs.

Who is Eligible?The borrower must meet the basic eligibility criteria for HAMP:
-  Principal residence.  The property may be vacant up to 90 days before the date of the Short Sale Agreement, Alternative Request for Approval of Short Sale, or Deed in Lieu of foreclosure but only if the borrower documents they were required to relocate at least 100 miles from their home for purposes of employment and they have not purchased another property in the 90 day period.
- First lien originated before 2009.
- Mortgage is delinquent or default is reasonably foreseable.
- Unpaid principal balance is no more than $729,750.
- Borrower's total monthly payment exceeds 31% of gross income.

Process- Servicer considers Borrower/Seller for HAFA within 30 days after Borrower:
   1) Does not qualify for trial HAMP
   2) Does not successfully complete trial HAMP
   3) Misses 2+ HAMP payments
   4) Requests a Short Sale or Deed-in-Lieu of Foreclosure

- If Borrower qualifies, Servicer sends a Short Sale Agreement (SSA) to Borrower
- Borrower signs and returns the SSA in 14 days.
- Short Sale Agreement gives Borrower 4 months to sell. Must use a Realtor.  Cannot sell home on own.  Servicer may extend up to 1 full year.
- Once offer received Borrower must submit to Servicer with a request for approval of Short Sale.
- Servicer has 10 days to approve or not.
- Closing in 45+ days.

Benefits for Homeowner

Sellers will like HAFA for the following reasons:
- Avoids foreclosure.  Foreclosure significantly impacts the credit score but a Short Sale won't affect the score as much and therefore is a better option.
- No contribution, promissory note or deficiency judgement required.  1st & 2nd lien holders will receive an incentive payment for approving Short Sale or Deed-in-Lieu.
- Pre-approved terms.
- Sellers will receive $1,500 in moving costs.
- Mortgage Insurers must approve and waive any right to collect additional sums from Borrower/Seller.
- Foreclosure may not be completed if Borrower/Seller is performing under the Short Sale Agreement.

For more information, please contact Diane Briggs at 916-956-4912 or Doug Briggs at 916-747-1592.

Diane and Doug Briggs have earned the nationally recognized Short Sales & Foreclosure Resource Certification. The National Association of REALTORS® offers the SFR certification to REALTORS® who want to help buyers and sellers navigate these complicated transactions, as demand for professional expertiese with distressed sales grows.


They are experienced successful Sacramento Short Sale Agents covering the Sacramento Metro Area, including the areas of Elk Grove, Pocket, Greenhaven, Wilton and Galt. Hablamos Espanol. Put our experience, integrity and knowledge to work for you.