HAFA - Home Afordable Foreclosure Alternatives

In 2009, the governement introduced Home Affordable Foreclosure Alternatives (HAFA) to address situations where servicers are unable to approve the Home Affordable Modification Program (HAMP), not accepted by the borrower or the borrower falls out of a HAMP modification. A Short Sale Agreement or DIL Agreement must be fully executed by the borrower and received by the servicer on or before December 31, 2012.

HAFA Guidelines and Forms

All servicers that participate in HAMP are required to comply with HAFA (short sale and/or DIL to qualified borrowers prior to foreclosure. HAFA provides financial incentives to borrowers, servicers and investors.

Participating HAFA Servicers

• Requires all subordinate lien holders to release their lien and agree not to pursure any deficiency against the borrower in exchange for a payout of 6% of the unpaid prnicipal balance (maximum of $6,000).
• Borrower Benefits - receive a $3,000 relocation incentive at the close of short sale or DIL.
• Servicer Benefits - $1,000 to cover admin and processing costs for completed transactions.
• Investor Benefits - maximum of $1,000 for allowing a total of up to $3,000 in short-sale proceeds to be distributed to subordinate lien holders.