Home Affordable Foreclosure Alternatives Program (HAFA)
Sponsored by the US Treasury Department, the HAFA program is designed to streamline the short sale process and offers financial incentives to both homeowners and lenders to encourage this type of resolution versus foreclosure. Lenders are required to release the homeowner from current and future mortgage debt liability. The purpose of the HAFA program is to help reduce the rate of foreclosures, as short sales have been shown to reduce the financial loss to the banks. And, short sale properties are rarely left vacant and neglected, thus reducing the chance of vandalism and deterioration that often becomes foreclosure properties. Lenders are required to release the homeowner from current and future mortgage debt liability and cannot seek a deficiency judgment or require homeowner to sign a promissory note for any unpaid balance. Note: FHA/VA loans currently do not qualify for HAFA and not all lenders/investors participate in HAFA.
The Benefits of a HAFA Short Sale:
No deficiency judgment against the seller.
- No cash contributions required at closing.
- No promissory notes from the seller.
- $3,000 to seller for relocation assistance.
- Up to $6,000 for junior mortgages.
Eligibility Requirements for a HAFA Short Sale
- Seller must have a legitimate hardship.
- Mortgage originated on or before January 1st. 2009.
- Mortgage is delinquent or default is foreseeable.
- Current unpaid principle balance is $729,750 or less.
- Higher balances for 2 – 4 units.
Note: Do not rely upon the information in this document when making decisions relative to any real property that you may own as it is probably inaccurate. Contact a competent attorney or accountant to learn more and to assist with making informed decisions.