Home Affordable Foreclosure Alternatives Program (HAFA)

The U.S. Treasury Department announced new guidelines this week designed to make short sales go more smoothly. To qualify under these new guidelines:
* The property must be the home owner’s principal residence.
* The home owner must be delinquent on the mortgage or close to defaulting.
* The loan must have been made before Jan. 1, 2009, and be for less than $729,750.
* The borrowers’ total monthly mortgage payment must exceed 31 percent of their before-tax income.
Under the plan, borrowers will receive $1,500 from the government for selling homes for less than the amount of their mortgages. Mortgage-servicing companies will get $1,000 for each completed short sale.
Second-mortgage holders can receive up to $3,000 of the sales proceeds in exchange for releasing their liens.
Investors who hold the first mortgage can collect up to $1,000 from the government for allowing the payments. Borrowers who complete a short sale under the program must be "fully released" from future liability for the debt, according to the guidelines.

Short Sale Reforms Receive Mixed Reviews
By: Brittany Dunn, DSNEWS.com
As DSNews.com reported earlier this week, the U.S. Treasury Department announced new guidelines to the short sale process on Monday in hopes of speeding up the recovery of the housing market. Occurring when a lender accepts the sale of a home at a price below the actual amount owed, short sales have become a growing part of the real estate business as troubled homeowners seek out alternatives to foreclosure.

Government unveils new short-sale rules
By J.W. Elphinstone
THE ASSOCIATED PRESS
Tucson, Arizona Published: 12.03.2009
The Treasury Department unveiled sweeping rules this week to help financially troubled homeowners who need to sell but can't get a price high enough to pay off their mortgages. Homeowners will even get $1,500 to help cover their moving costs.
The plan is designed to help homeowners who don't have the income or debt levels to qualify for a loan modification under the Obama administration's $75 billion Making Home Affordable program. The plan establishes timelines, a standard process and documents, and cash incentives for participation.

Press Releases from MakingHomeAffordable.gov
Read New Articlies here
Servicer Performance Report through October 2009

Government Will Provide Financial Incentives To Encourage Short Sales
Wednesday, December 02, 2009
Written by: Jon Prior , HousingWire.com
The US Treasury Department has announced plans to launch a foreclosure program aimed at encouraging borrowers, servicers and investors, to pursue short sales. Scheduled to launch in April 2010, the Home Affordable Foreclosure Alternatives Program (HAFA) will offer up to $3,500 in incentive payments to qualified borrowers, servicers and investors who complete short sale transactions for properties with loans on the verge of foreclosure.

Weekly Updates from Making Home Affordable
This site provides mortgage servicers with the information and tools needed to participate in the Obama Administration's Home Affordable Modification Program (HAMP) and other program updates related to the Making Home Affordable (MHA) Program.
December 2, 2009
HAMP Update - Q4 2009 Base NPV Model Documentation Supplement Now Available

Short Sale Incentives Coming in 2010, Treasury Says
By JON PRIOR
December 1, 2009 10:38 AM CST
As HousingWire first reported, the US Treasury Department will launch the Home Affordable Foreclosure Alternatives Program (HAFA) in 2010.

Guidelines Aim to Ease Short Sales
By RUTH SIMON , Wall Street Journal
December 1, 2009
The Obama administration laid out final guidelines on Monday that should make it easier for some financially troubled borrowers to sell their homes.
The guidelines are designed to encourage the use of short sales, transactions in which the borrower with lender approval sells the home for less than what is owed on the loan. The program also makes it easier for borrowers to voluntarily transfer ownership of properties through a "deed in lieu of foreclosure."

On November 30, 2009, the Treasury Department released guidelines and forms for its new Home Affordable Foreclosure Alternatives Program (HAFA).
by Realtor.org
HAFA is part of the Home Affordable Modification Program (HAMP). HAFA provides incentives in connection with a short sale or a deed-in-lieu of foreclosure (DIL) used to avoid foreclosure on a loan eligible for modification under the HAMP program. HAFA applies to loans not owned or guaranteed by Fannie Mae or Freddie Mac, which will issue their own versions of HAFA in coming weeks.
HAFA is a complex program, with 43 pages of guidelines and forms, designed to simplify and streamline use of short sales and deeds-in-lieu of foreclosure. HAFA:
Complements HAMP by providing a viable alternative for borrowers (the current homeowners) who are HAMP eligible but nevertheless unable to keep their home.
Uses borrower financial and hardship information already collected in connection with consideration of a loan modification.
Allows borrowers to receive pre-approved short sales terms before listing the property (including the minimum acceptable net proceeds).
Prohibits the servicers from requiring a reduction in the real estate commission agreed upon in the listing agreement (up to 6 percent).
Requires borrowers to be fully released from future liability for the first mortgage debt (no cash contribution, promissory note, or deficiency judgment is allowed).
Uses standard processes, documents, and timeframes/deadlines.
Provides financial incentives: $1,500 for borrower relocation assistance; $1,000 for servicers to cover administrative and processing costs; and up to $1,000 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).
The program does not take effect until April 5, 2010, but servicers may implement it before then if they meet certain requirements. The program sunsets on December 31, 2012.

Introduction of Home Affordable Foreclosure Alternatives – Short Sale and Deed-in-Lieu of Foreclosure
Making Home Affordable
November 30, 2009
Help for America's Home Owners
Supplemental Directive 09-09

HAMP Update – New Program Offers Borrowers Foreclosure Alternatives
Making Home Affordable
November 30, 2009
Help for America's Homeowners
Supplemental Directive 09-09: Introduction of Home Affordable Foreclosure Alternatives – Short Sale and Deed-in-Lieu of Foreclosure was published