HAFA stands for Home Affordable Foreclosure Alternatives and is a program instituted by the government. Banks who took bailout money have been forced to participate in HAFA. If you are facing foreclosure and are behind on your mortgage, it may be in your best interest to do a HAFA Short Sale. The benefits of being in the HAFA program include receiving $3,000 in relocation assistance at closing, as well as the lender completely discharging any deficiency amount owed to them. Meaning they can never come back after you for the balance between what you owed originally on your mortgage and what it sold for on a short sale. In 2010, only 3% of people who applied to HAFA actually got into the program, but this year that number has risen significantly and I’ve had several of my clients accepted.
The U.S. Treasury Department has updated its Home Affordable Foreclosure Alternatives (HAFA) program guidelines. The changes take effect June 1, 2011. New policies include a new acknowledgment requirement. The servicer must send written confirmation to the borrower within 10 business days following the receipt of a request for either a short sale or deed-in-lieu to acknowledge the request. If they do not, they are in violation of the requirements of this federal program!
This timeline is now no more than 45 calendar days (not business days) from the date of the borrower’s request. Within that 45 days, your lender (or servicer) has to give the borrower a written approval, denial or alternative offer as well as a copy of the executed sales contract and any supporting documents dealing with subordinate liens. If the mortgage loan servicer fails to do this, it must at least send the borrower a written status notice within that same time period, along with written updates every 15 calendar days until the final decision is made.
In addition, servicers will now be able to approve short sales to non-profit organizations with the stated purpose that the property will be resold or rented to the borrower. This was previously prohibited by the program’s “arm’s length” requirement.
If you’ve applied for HAFA before and were denied, it may be time to re-apply! Previously, to get into the HAFA program, your mortgage payment had to exceed 31% of your stated income. That requirement was also recently waived earlier this year. Also under the old guidelines the property had to be your primary residence, but HAFA’s guidelines have loosened there as well, and now they will allow Sellers into the program if they occupied the property in the last year, and relocated elsewhere due to a job or financial circumstances. The Seller must still have a hardship however.
If you are interested in doing a HAFA Short Sale, contact me today for a free and private consultation on your foreclosure alternatives – its important to have a Realtor who has experience with HAFA’s guidelines.