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What is HAFA?

On November 30, 2009, the Treasury Department released guidelines for a new program called Home Affordable Foreclosure Alternatives (HAFA). HAFA is an optional program under the Home Affordable Modification Program (HAMP). HAFA and HAMP -- got it? Trust me, you work with these enough and you remember what all these acronyms mean.

HAFA provides incentives for banks to look at alternatives to foreclosure. These only apply to loans eligible for modification under HAMP. In other words, if your loan qualifies for HAMP, then you can partake in HAFA -- if your bank chooses to participate in it. The alternatives in question include short sales and deed-in-lieu of foreclosure transactions. HAFA is a pretty complex program, but the gist of it is that it tries to make these options more enticing to lenders while making the overall process easier.

So how does it work? Well, the good news for homeowners is that there isn't another mountain of paperwork to fill out. HAFA uses the same data collected under HAMP and tries to provide a smooth path to alternatives outside of keeping their home. For the lender, there's financial incentive for things such as borrower relocation assistance, along with partial reimbursement to cover a portion of administrative costs. In a nutshell, the government is trying to create a win-win scenario that rewards banks for making it easier to short sale.

The official kick-off for the HAFA program is April 5, 2010, but servicers can implement it if they adhere to a set of guidelines. In addition, many banks may offer their own version of this that better works with their own internal processes.

Israel Gonzalez

Real Estate Broker



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The views published here are the opinions of the writer and are not a substitute for legal counsel.


Molly said:

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# January 28, 2018 3:34 AM
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