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HAFA Series Part 1 – What is the Home Affordable Foreclosure Alternatives Program?

By Kathryn Bovard

The Home Affordable Foreclosure Alternatives (HAFA) Program provides additional options to avoid foreclosure and offers incentives to borrowers, servicers and investors who utilize a short sale or deed-in-lieu (DIL) to avoid a foreclosure.

In a short sale, the loan servicer allows the borrower to list and sell the mortgaged property with a licensed real estate agent with the understanding that the net proceeds from the sale may be less than the total amount due on the first mortgage.  In other words, a homeowner’s lender allows the property to be sold at a loss where the lender initially takes all or part of the loss.  Generally, if the borrower makes a good faith effort to sell the property but is not successful, a servicer may consider a DIL. With a DIL, the borrower voluntarily transfers ownership of the property to the servicer – provided title is free and clear of mortgages, liens and encumbrances.

Under normal circumstances a short sale can take several months and ongoing work to complete.  HAFA is designed to simplify and streamline the short sale process by providing a standard process flow, minimum performance timeframes for lenders, sellers and agents and standard documentation.

If the program works as proposed, here are some highlights and benefits of HAFA for the qualified homeowner:

  • Complements HAMP (Home Affordable Modification Program – www.makinghomeaffordable.com) by providing a viable alternative for borrowers (the current homeowners) who are eligible for a potential home loan modification through HAMP but nevertheless unable to keep their home.
  • Uses borrower financial and hardship information already collected in connection with consideration of a loan modification under HAMP.
  • Allows borrowers to potentially 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 and if the subordinate lien holder receives an incentive under HAFA, that debt as well (no cash contribution, promissory note, or deficiency judgment is allowed).
  • Provide financial incentives: $1,500 for borrower relocation assistance; $1,000 for servicers to cover administrative and processing costs; and up to $1,000 match for investors for allowing a total of up to $3,000 in short sale proceeds to be distributed to subordinate lien holders (on a one-for-three matching basis; up to 3% of the unpaid principal balance of each subordinate loan).

HAFA Series Part 2…Who is eligible for HAFA?

HAFA Series Part 3 – Which loan servicers are participating and review of the timeframes

Are you a Las Vegas Homeowner facing a possible foreclosure or considering a short sale?

The Serra Group is here for your confidential, no obligation consultation
regarding your options – there are solutions!  Call Kathryn at 702-348-7191.

Related posts:

  1. HAFA Series Part 4 – What else should I know about Home Affordable Foreclosure Alternatives?
  2. HAFA Series Part 5 – Can I Request a HAFA Short Sale without doing a HAMP modification?
  3. HAFA Series Part 3 – Which loan servicers are participating and review of the timeframes


  1. [...] HAFA is the Home Affordable Foreclosure Alternatives program from the U.S. Treasury that became effective on April 5, 2010 designed to streamline and standardize the short sale process for qualified homeowners.  Read our 5 part series to learn more about the HAFA program. [...]

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