HAFA explained

What is HAFA?
The Home Affordable Foreclosure Alternatives (HAFA) Program is a government-sponsored initiative led by the US Treasury Department, administered by Fannie Mae with Freddie Mac as compliance agents, and executed by participating lenders to help homeowners avoid foreclosure, specifically through short sales or deeds-in-lieu.

Who can participate in the HAFA program?
The participating servicers must assess a borrower for HAFA if they request to short sale or deed in lieu under the terms of HAFA.  They must also consider a homeowner for HAFA within 30 days of not qualifying for a HAMP (Home Affordable Modification Program) modification, having not successfully completed a HAMP trial period, or having missed at least 2 consecutive payments on a HAMP modification. If a homeowner had asked the servicer to allow them to short sell under the terms of HAFA, the servicer is required to first offer them a loan modification or retention program first.

Can sellers trying to do a HAFA short sale also be asking for a HAMP modification?
The two cannot be done at the same time. It is a requirement of HAFA that a homeowner is not participating in a HAMP program.

Does the homeowner have to live in the property to be considered for HAFA?
“The property is the borrower’s principal residence, except that the property can be vacant up to 90 days prior to the date of the Short Sale Agreement (SSA), Alternative Request for Approval of Short Sale (Alternative (RASS) or DIL Agreement if the borrower provides documentation that the borrower was required to relocate at least 100 miles from the property to accept new employment or was transferred by the current employer and there is no evidence indicating that the borrower has purchased a one- to four-unit property 90 days prior to the date of the SSA, Alternative RASS or DIL Agreement.” [From the Supplemental Directive 09-09]

What loans are not eligible for HAFA short sales?
Fannie Mae, Freddie Mac, FHA, or VA

What lenders are participating in HAFA?
As a rule, lenders already participating in the Home Affordable Modification Program (HAMP) are participating in HAFA. For a full list of servicers participating in HAMP, visit Making Home Affordable Participating Servicers List.

When does HAFA expire?
HAFA is set to expire December 31, 2012. Like other government initiatives, if the program is successful, it may be extended.

I heard that Approvals only take 10 days.  Is that so?
This is a misconception and a truth.  HAFA speeds up the short sale process by putting in distinct timelines.  One such time-line is servicer response to a completed application no later than 10 days after submission. The longest amount of time you should expect a HAFA short sale to take is 5 months.  At the servicer’s discretion, the program can be extended up to 12 months. 

Do HAFA short sales require an agent list the property?
YES.  All HAFA short sales must be listed by an agent.

How is HAFA different from a regular short sale? There are quite a few issues that differentiate a HAFA short sale from a non-HAFA short sale, including: 1) set timelines, 2) pre-approved selling prices, 3) payments to the sellers upon completion...

Do the seller’s get an incentive? YES.  HAFA will provide sellers up to $3000 for Relocation Assistance if they complete the HAFA short sale or deed in lieu process. Only one payment per household is given.

Who completes the Short Sale Agreement ?
This form is completed in cooperation with the listing agent so that the servicer knows that the agent agrees to the HAFA program terms and conditions.

Are their tax and credit consequences from a HAFA short sale or deed-in-lieu?
The difference between the remaining amount of principal owed and the amount that the servicer receives from the sale must be reported to the Internal Revenue Service (IRS) on Form 1099C.  It will be reported as debt forgiveness that could be taxed as income. The $3,000 Borrower Relocation Assistance could also be taxable.  Sellers need to be aware of the income tax consequences and/or derogatory impact on credit that may come with a short sale or deed-in-lieu.  Sellers should always consult a tax accountant, the IRS and appropriate legal counsel to determine potential liabilities and to explore other options.

CLICK ON THE HAFA BUTTON BELOW TO SEE IF YOU ARE ELIGIBLE TO PARTICIPATE IN THE HAFA PROGRAM

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