HAFA Program

Introduction into government program HAFA
HAFA stands for ‘Home Affordable Foreclosure Alternatives ‘
For Homeowners who can no longer afford their mortgage payments and need help with transitioning into a more affordable housing solution, the HAFA program was created for you. HAFA provides options for homeowners to transition out of their current mortgage. The most common and widely used option is a short sale. A short sale is when the mortgage company allows you sell your house for an amount that falls “short” of the amount you still owe. Through HAFA they assist with making the process as smooth as possible. There are even various incentives that homeowners can take advantage of when utilizing the HAFA program.
Through HAFA you can receive free advice from HUD-approved housing counselors and licensed real estate professionals.
A HAFA short sale completely releases you from your mortgage debt after selling the property. This means you will no longer be responsible for the amount that falls “short” of the amount you still owe. The deficiency is guaranteed to be waived by the servicer (the ‘servicer’ is more commonly known as the bank).
HAFA short sales generally recommend (and in some cases require) that you utilize their pre-approved price program. This program allows a HAFA approved appraiser to determine an acceptable sale price for your property prior to submitting an offer. If you have an offer they will still conduct their own appraisals, but they prefer that this process is conducted before an offer is submitted. Once they determine a reasonable sale price your agent will adjust their marketing efforts accordingly. You can still submit lower offers along with a reconsideration request if the HAFA values are not in line with the current market values.
HAFA has a less negative effect on your credit score than foreclosure or conventional short sales.
At closing HAFA provides $3,000 in relocation assistance to the homeowner. Some servicers have established programs that may offer an additional supplemental incentive in excess of the $3,000 but you will receive at least $3,000 through the HAFA program.

You MAY be eligible for HAFA if you meet all of the following criteria:
You live in the home or have lived there within the last 12 months.
You have a documented financial hardship.
You have not purchased a new house within the last 12 months.
Your first mortgage is less than $729,750.
You obtained your mortgage on or before January 1, 2009.
You must not have been convicted within the last 10 years of felony larceny, theft, fraud, forgery, money laundering or tax evasion in connection with a mortgage or real estate transaction.
**Please note these guidelines can fluctuate, and there are additional criteria that may apply. You will need to discuss the qualification terms in more detail with your agent and/or mortgage servicer to be sure if you qualify.
**Use the Fannie Mae & Freddie Mac Look-Up Tool links at the bottom of this page to see if they own your mortgage.

Additional HAFA info:

Short Sale Program—Terms and Conditions
1. Allowable Costs that May be Deducted from Gross Sale Proceeds
a. Closing Costs. The closing costs paid by you or on your behalf as seller must be reasonable and customary for the market in which the Property is located. Closing costs which may be deducted from the gross sale proceeds are limited to title search and escrow expenses usually paid by the seller; reasonable settlement escrow/attorney’s fees; transfer taxes and recording fees usually paid by the seller; termite inspection and treatment as required by law or custom; pro-rated real property taxes; and negotiated real estate commissions which may not exceed six percent (6%) of the contract sales price.
b. Other Liens. You must be able to provide the buyer of your Property with clear and marketable title. We will allow up to six percent (6%) of the unpaid principal balance of each subordinate lien on the Property in order of priority, not to exceed a total of $6,000, to be deducted from the gross sale proceeds to pay the subordinate lien holders to release their liens. We will require each subordinate lien holder to release you from personal liability for the loans secured by their liens on the Property in order for the sale to qualify for this program, but we do not take any responsibility for ensuring that the lien holders do not seek to enforce personal liability against you. Therefore, we recommend that you take steps to satisfy yourself that the subordinate lien holders release you from personal liability.
c. Real Estate Commissions. We will allow real estate commissions as stated in the listing agreement between you and your broker, not to exceed six percent (6%) of the contract sales price, to be paid from the gross sale proceeds to the listing and selling brokers involved in the transaction. Neither you nor the buyer may receive a commission. Any commission that would otherwise be paid to you or the buyer must be reduced from the commission due on sale. Fees of a third party to negotiate a short sale with the servicer (commonly referred to as “short sale negotiation fees” or “short sale processing fees”) may not be paid from the sale proceeds.
d. Borrower Relocation Assistance. If the closing of the short sale occurs in accordance with this RASS, you will be entitled to an incentive payment of $3,000 to assist with relocation expenses. We will instruct the settlement agent to pay you from the sale proceeds at the same time that all other payments, including the payoff of the Loan, are disbursed by the settlement agent. Only one payment for the Property is provided for the relocation assistance, regardless of the number of Borrowers.
2. Property Maintenance and Expenses. You are responsible for all property maintenance and expenses until the sale of your Property, including utilities, assessments, association dues, and costs for interior and exterior maintenance. Additionally, you must report any and all property damage to us and file a hazard insurance claim for covered damage.
3. Parties to the Sale. The Sales Contract must include the following clauses: “Seller and Buyer each represent that the sale is an “arm’s length” transaction and the Seller and Buyer are unrelated to each other by family, marriage or business relationship.” “The Buyer agrees not to sell the property within 90 days of closing of this sale.”
4. Foreclosure Sale Suspension. We may initiate or continue the foreclosure process as permitted by the Loan documents and applicable law; however, we will suspend any foreclosure sale date until the expiration date of this RASS or the scheduled closing date of an approved short sale, whichever is later, provided that you abide by the RASS terms and conditions.
5. Satisfaction and Release of Liability. If all of the terms and conditions of this RASS are met, upon sale of the Property, we will prepare and send to the settlement agent for recording, a release of the mortgage lien, and we will release you from any further liability on the Loan.
6. Termination of This RASS. Unless otherwise agreed by the parties, this RASS will terminate on [insert date] if the sale does not close. This RASS may be terminated earlier if:
a. You fail to provide all the required documents listed below.
b. Your financial situation improves significantly, you qualify for a modification, you bring the Loan current or you pay off the Loan in full.
c. You or your Broker fails to act in good faith in closing on the sale of the Property or otherwise fails to abide by the terms of this RASS.
d. A significant change occurs to the Property condition or value.
e. There is evidence of fraud or misrepresentation.
f. You file for bankruptcy and the Bankruptcy Court declines to approve the RASS.
g. Litigation is initiated or threatened that could adversely impact title to the Property or interfere with a valid transfer of marketable title to the Property.
7. Settlement of a Debt. The proposed transaction represents the Servicer’s attempt to reach a settlement of the Loan. You are choosing to enter into this transaction even though there is no guarantee that the transaction will be successful. In the event this transaction is unsuccessful, the Servicer may exercise all remedies under the Loan documents, including foreclosure.

Fannie Mae Look-up Tool Link

Freddie Mac Look-up Tool Link: