HAFA – Making Home Affordable Program

  • 6 months ago
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We have received many questions regarding the recent updates to the HAFA (Home Affordable Foreclosure Alternatives) program from real estate professionals and the news media.

This page may serve as a basic resource for those seeking more information.  Please feel free to blog or include this information in your news stories with appropriate attribution to HomeFlux.com and link to this page.

“I heard the HAFA rules were updated in December, where can I find official notice of this?”
The HAFA program was updated and modified with Supplemental Directive 10-18 which was released on December 28, 2010.

Further details on the program can be found on the HAMP Administrative Site.

“Where can I get a list of mortgage services who participate in HAMP/HAFA?”
The list of companies as of January, 2011 can be found here.  A searchable list can also be found on the MakingHomeAffordable site.

“Where else have these changes been reported in the media?”
This change has received minor coverage from Inman and CNBC but it has not been widely reported.

HAFA Overview
The HAFA program was intrudced to provide an option for homeowners who are unable to keep their homes through the existing Home Affordable Modification Program (HAMP).  HAFA provides incentives in connection with a short sale to avoid foreclosure on a loan elidgible for modification under the HAMP program.

The HAFA provisions (prior to the updates) were

  • Allows borrowers to receive pre-approved short sales terms before listing the property (including the minimum acceptable net proceeds).
  • Requires borrowers to be fully released from future liability for the first mortgage debt (no cash contribution, promissory note, or deficiency judgment is allowed).
  • Provides the following financial incentives:
    • $3,000 for borrower relocation assistance;
    • $1,500 for servicers to cover administrative and processing costs;
    • Up to $2,000 for investors who allow a total of up to $6,000 in short sale proceeds to be distributed to subordinate lien holders, on a one-for-three matching basis.
  • Requires all servicers participating in HAMP to implement HAFA in accordance with their own written policy, consistent with investor guidelines. The policy may include factors such as the severity of the potential loss, local markets, timing of pending foreclosure actions, and borrower motivation and cooperation.

After the updates, HAFA has been modified so that:

  • Those seeking a short sale must get an answer within 30 days
  • Servicers are no longer required to verify a borrowers financial information
  • Servicers are no longer required to determine if the Debt-to-Income (DTI) exceeds 31%
  • Second lien holders no longer must accept 6% of the unpaid balance

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