Home Affordable Foreclosure Alternative (HAFA) Explained
February 11th, 2010 categories: Ask the "Specialist", For Sellers, Short Sales
Home Affordable Foreclosure Alternatives (HAFA) will begin April 5th of 2009.
What is HAFA?
It is a new Foreclosure prevention program designed to streamline the Short Sale and Deed-in-lieu of foreclosure process.
- Those homeowners who are not eligble for the Home Affordable Modification Program (HAMP) can apply for the HAFA program. Those who do not qualify for HAMP and wish to avoid foreclosure can do so by applying for the HAFA program.
Who is Eligible for HAFA?
- Home owners who are delinquent or in default on their mortgage on their principal residence.
- Loan must have origination date January 1, 2009 or sooner.
- Amount of loan cannot exceed $730,000
- Current mortgage exceeds 31% of homeowners gross income.
What are the Steps?
Borrowers expresses interest in HAFA program.
Servicer has 14 days to determine Net Proceeds they will accept in Bank Directed Short Sale. This amount is expressed as a :
- % of current market value;
- % of list price;
- fixed dollar amount.
Step 2:
A Short Sale Agreement is put into action with a written agreement between lender/servicer and borrower. This agreement shall include:
- List Price/ Allowable Net proceeds to lender
- Guarantee 120 days or greater before lender can pursue foreclosure.
- Homeowner must agree to pay 31% of gross income while Short Sale is being considered
- Maximum Real Estate Commission of 6%. Realtor must also agree that out of the real estate commission a % or $ amount will be paid a third party vendor.
Step 3:
Borrower must provide evidence within 14 days of Short Sale Agreement (effective date)
- A signed copy of a Broker Listing Agreement at Approved List price.
- Information regarding any Subordinate Liens.
- Market the property 120 days or greater
- 3 business days to submit all offers
- Servicer has 10 days to approve all offers.
- Buyer has 45 days to get financing and close
- Borrower has 45 days to move out of the house from date contract has been acccepted.
HAFA Agrees to the following Payments :
- B orrower to receive $1,500.00 for moving expenses.
- Servicer to receive $1,000.00 for processing costs.
- Investor to receive a $1,000.00 back on maximum $3,000.00 paid to all subordinate liens.
Advantages to HAFA:
- No hidden administrative fees can be asked from borrower from servicer.
- The investor must waive all rights to seek a deficiency judgement.
Disadvantages of HAFA:
- Subordinate liens may not agree to $3,000.00 maximum payment.
- Investor owned property does not qualify.
