The Home Affordable Foreclosure Alternatives Program

Trying to reduce the rising number of foreclosures in the U.S., the
Treasury Department introduced a new federal program that makes it
easier to process a short sale for people unable to keep their homes.

Home Affordable Foreclosure Alternatives (HAFA) streamlines
the process for doing a short sale or deed-in-lieu of foreclosure for
distressed homeowners who do not qualify for a federal home loan
modification through the Home Affordable Modification Program
(HAMP) or have missed consecutive payments after a modification.

The HAFA program started April 5, 2010, and ends December 31,
2012. Federal rules require servicers participating in HAMP to implement
HAFA. The new program also requires borrowers to be released fully
from future liabilities related to their first mortgage, including cash
contributions, promissory notes and deficiency judgments.

Participation in HAFA cannot save homeowners from losing their
property, but it can eliminate the effects of a foreclosure on their
credit. Financial incentives for program participation include a $1,000
servicing bonus for lenders and a $1,500 relocation bonus for displaced
homeowners. Lenders of other subordinate liens (e.g., HELOCs) may be
allowed to keep a limited portion of the proceeds (up to $3,000 each) of
a short sale, with the first-lien lender’s approval.

HAFA is designed for homeowners who have applied to HAMP
for assistance but have had no success with their loan modification
program. To participate in HAFA, homeowners must still meet HAMP’s
eligibility criteria: home is principal residence; first-lien mortgage is in
delinquency or default is reasonably foreseeable; loan closed before
January 1, 2009; unpaid balance is under $729,750; and the mortgage
payment is over 31% of gross income.

For more information on HAFA, go to the following link:
https://www.hmpadmin.com/portal/programs/foreclosure_alternatives.html

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