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Posts Tagged ‘Home Affordable Foreclosure Alternative’

In an effort to end the foreclosure crisis, the Federal Government has been trying to keep owners in their homes through Mortgage Modifications. Now, under a new plan, it will try to make short sales easier.

The Home Affordable Foreclosure Alternative Program (HAFA for short) is a complex program designed to simplify, streamline, and standardize the short sale process. HAFA not only streamlines the short sale process, it allows some distressed owners to walk away with a little cash.


HAFA is an extension of the Home Affordable Modification Program (HAMP) that sought to assist home-owners through mortgage modifications. Unfortunately, the HAMP program has not been very successful. Thus, HAFA offers incentives to both home owners and their lenders to facilitate a short sale. According to the National Association of Realtors, HAFA does not apply to Fannie Mae or Freddie Mac loans, which will issue their own versions of HAFA. The new HAFA program takes effect on April 15, 2010 and provides the following benefits:

  • Short Sale pre-approval much earlier – before even signing a listing agreement or an offer.
  • Prohibits commission reductions below 6% (unless required by private mortgage insurance)
  • Requires full release of any 1st mortgage deficiencies – borrowers must be released from their debt
  • Provides financial incentives to lenders and owners: $1500 for owners and $1,000 for lenders.
  • Institutes uniformed and streamlined procedures that all participating banks must follow.

HAFA is a complex program with dozens upon dozens of pages of guidelines and forms. Fannie Mae and Freddie Mac will likely add hundreds of pages of their own programs.   HAFA is a new program and there is very little guidance.   We found the following resources helpful:

Homestead Title is committed to providing the most up to date information and will be offering updates often.

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