HOME AFFORDABLE FORECLOSURE ALTERNATIVES (HAFA)

Quick Fact Sheet

What is HAFA?
HAFA is a program created by the U.S. Department of the Treasury in 2009. It went into effect on April 5, 2010. Designed to provide homeowners who are unable to retain their home through the Home Affordable Modification Program (HAMP) or other loan modification additional options.

How does HAFA help homeowners?

It provides additional alternatives to other government programs to help homeowners who are in danger of losing their home to foreclosure. In some cases when a homeowner does a short sale or other foreclosure alternative, they can still be responsible to pay back the difference between what they owed on the mortgage and what they were ultimately able to pay the bank. This is called a Deficiency Judgment. HAFA releases homeowners from any future liability or deficiency judgments. HAFA improves the short sale process by creating uniform guidelines and timeframes. Homeowners may be eligible for $3,000 in financial incentives, called Relocation assistance. HAFA provides up to $8,500 to pay to 2nd liens that might exist on the home.

Who is eligible for HAFA?

The mortgage must have been established before Jan. 1, 2009. The homeowner must owe more on their mortgage than the current value of the property. The homeowner must be late on their payments or in imminent danger of default. This is called a hardship. If the home is already in foreclosure or if the homeowner is going through bankruptcy, they may also be eligible for HAFA. If a homeowner is 90 days or more delinquent with a FICO credit score less than 620, they will be automatically considered to have a hardship.

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HOME AFFORDABLE FORECLOSURE ALTERNATIVES (HAFA)

Who is eligible for HAFA? continued
The unpaid principal balance of the mortgage cannot be greater than $729,750. HAFA approval must be established by December 31, 2013. Closing on a HAFA short sale must be completed before Sept. 30, 2014. The homeowner must be determined to be ineligible for HAMP or other foreclosure avoidance options. The sale of the home must be an arms length transaction. This means that the homeowner and the new buyer must have no previous connection to one another.

Applying for HAFA and Timelines

The homeowner must ask the servicer (most often, the lender) to consider them for HAFA eligibility. The lender or servicer must determine if the homeowner is eligible within 30 days. In some cases, lenders or servicers will automatically attempt to determine HAFA eligibility. If they decide a homeowner is eligible, they must notify the homeowner. The homeowner then has 14 calendar days to submit a request. The servicer will acknowledge that they have received the request from the homeowner within 10 business days. The servicer or lender will do an independent assessment of the property value. The lender must communicate approval, disapproval or a counter-offer no later than 30 days after receiving the request and required paperwork from the homeowner. Closing date will be established by the lender and cannot be quicker than 45 days unless all parties in the transaction agree.

For answers to more questions or to determine the eligibility of your clients for HAFA, go to www.hmpadmin.com

www.cdpe.com | 800.482.0335
2012 Charfen Institute | All Rights Reserved