The new Home Affordable Foreclosure Alternative (HAFA) program introduced by the Treasury starts today.  This program was designed to help homeowners who did not qualify for the Home Affordable Modification (HAMP) program or were unsucessful at completing a trial modification.  The new HAFA program allows the homeowner to apply for and get a pre-approved short sale on their FIRST MORTGAGE.

The key to the new HAFA program is that the homeowner must meet the HAMP guidelines to be considered, which are as follows:

  1. Property must be the homeowner’s primary residence.
  2. The first mortgage must have originated before 2009.
  3. Mortgage payments must be delinquent OR default is reasonably foreseeable.
  4. Unpaid balance is not more than $729,750.
  5. Homeowner’s TOTAL monthly payment (principle, interest, taxes, insurance and HOA dues) MUST EXCEED 31% of thier GROSS MONTHLY INCOME.

Timelines for this program are set at much shorter periods than traditional short sales. 

  1. Within 30 days of the request to be considered the servicer must respond to the homeowner.
  2. 14 calendar days from the servicer’s response the homeowner must sign the “short sale agreement” and return it to the servicer.
  3. At this point the homeowner then lists the property.
  4. Once an offer is recieved the homeowner must submit it to the servicer within 3 business days.
  5. The servicer then has 10 business days to accept or reject the offer.

If the servicers can meet these deadlines it will greatly improve the market for these short sale properties.  (I for one am currently in the watch and see mode.) 

Here are some other key points that must be considered….

  1. Homeowner gets a $1500 incentive for relocation assistance at the conclusion of the sale.
  2. Homeowner must negotiate separately with any second mortgages etc.
  3. If there is mortgage insurance the insurer must waive their rights to recieve additional payment.
  4. Must be an arms-lenght transaction.
  5. Servicer/Investor must agree not to pursue a deficiency balance against the homeowner (this is huge!)

Contact me for more detailed information and to see if you might qualify for this program.