HAFA Frequently Asked Questions

What is HAFA?
HAFA (Home Affordable Foreclosure Alternatives) is a new government program designed to assist homeowners with alternatives other than foreclosure.  HAFA is an extension of the HAMP (Home Affordable Modification Program) and its purpose is to streamline the short sale process and to develop a standard of rules and timelines amongst mortgage servicers.  Benefits to the borrower include no deficiency recourse and a relocation incentive paid to the homeowner at the close of escrow.  Junior lien holders are also given a government subsidized payment for release of the lien.

In addition to the benefits listed above, the program allows the homeowner to get a HAFA Short Sale approval BEFORE listing their property, yet I see problems in the horizon with this concept, in that an unreasonable sales price could be set by the bank/servicer and the timeline allowed could expire.
Does HAFA apply to loans guaranteed by Fannie Mae, Freddie Mac, VA or FHA?
No.  HAFA is designed for all other loans.  Fannie Mae and Freddie Mac are to have their guidelines published by October 2010.
FHA and VA have their own short sale programs.  More information can be found

How do I find out if I qualify for HAFA?
Below is a list of the general requirements.  Please note that every homeowner’s situation is unique and the banks/servicers do not publish their rules and guidelines for our review.   Fore a full
explanation of HAFA, you can review the HAFA Directive 09-09 Revised 

• Does not qualify for a HAMP Trial Period Plan
• Does not successfully complete a HAMP Trial Period Plan
• Is delinquent on a HAMP modification by missing at least two consecutive payments
• Requests a short sale or deed-in-lieu
For a loan to qualify, it must meet the following criteria:
• The property is the borrower’s principal residence
• The mortgage loan is a first lien mortgage originated on or before January 1, 2009
• The mortgage is delinquent or default is reasonably foreseeable
• The current unpaid principal balance is equal to or less than $729,750
• The borrower’s total monthly mortgage payment exceeds 31 percent of the borrower’s gross income
• The mortgage is not owned or guaranteed by Fannie Mae or Freddie Mac

What lenders/servicers are participating in HAFA?
Per the HAFA guidelines,
lenders already participating in the Home Affordable Modification Program (HAMP) are participating with HAFA. 
How does a homeowner qualify for the $3,000 relocation incentive?
If a HAFA short sale successfully closes escrow, then the entire household will receive the $3,000 incentive from the escrow/title company.

May junior lien holders seek contributions from the real estate agent or the borrower as a condition for releasing the lien and the borrower from personal liability?
No.  The Treasury Department guidelines clarify that junior lien holders may not require such contributions.  Any payments made to junior lien holders must be shown on the HUD-1 closing statement. 
Must a homeowner use a licensed Real Estate Agent to sell the home?
The HAFA Directive states the homeowner must list the property with a licensed real estate professional.
It is very important that homeowners qualify their real estate professional before listing their home.  Interview questions should include:
1.  How will you keep me informed about the progress of my transaction?  How frequently?  There is not a right answer to this question.  Many homeowners only want news when something changes or happens, yet most want to know every week what is happening with their sale.  Be sure you communicate your personal needs up front to save yourself lots of grief later on.
2.  What designations do you hold?  I have never put much weight behind a designation, because I believe experience is always the best teacher, yet because we are experiencing such turbulent changing times, continual specialized training is a must for any agent dealing with short sales.
3.  What is your business philosophy?  Again, there is not a right answer to this question, but the response will help you access what’s important to the agent and determine how closely the agent’s goals and business emphasis mesh with your own.
Deciding on a short sale will give you a sense of closure to your current strained situation, yet the entire process can be drawn out and keep you emotionally charged.  You need a real estate professional who knows the ropes and will communicate all the news to you, whether good or bad.
Many real estate agents tell me they have an investor who will buy my home and I can rent it back or even buy it back in a few years.  Or a family member wants to purchase the home for me.  Is this allowed with HAFA?
Absolutely not.  The HAFA Short Sale Agreement (SSA) requires the borrowers to sign “under penalty of perjury” that:
1.  The sale of the property is an “arms length” transaction, between parties who are unrelated and unaffiliated by family, marriage, or commercial enterprise;
2.  There are no agreements or understandings between you and the Buyer that you will remain in the property as a tenant or later obtain title or ownership of the property;
3.  Neither you nor the Buyer will receive any funds or commissions form the sale of the property; and
4.  There are no agreements or offers relating to the sale or subsequent sale of the property that have not been disclosed to the Servicer.
The banks/servicers run your file through a QC after the close of escrow.  With all the methods banks have to find fraud, I highly suggest you do not go down this road.  This would be a fraud case and believe me; the government is not laying low about this, especially in this current strained financial environment. Please note that a regular short sale may not prohibit this.
The government is also giving the bank servicers financial incentives for HAFA short sales or Deed in Lieu of Foreclosure.  The program became effective April 5, 2010 and sunsets on December 31, 2012.