HAFA has arrived - April 5th 2010

Announced last November, today officially marks the date when servicers had to have in place the Home Af0rdability Foreclosure Alternatives Program (HAFA). The Treasury has set the required guidelines for eligibility, underwriting and servicing. Having a standard practice for short sales should go along ways towards making real estate agents sane again.
This new directive is aimed at loans that are not owned by or guaranteed by Fannie Mae or Freddie Mac. Recently Wells Fargo, Bank of America, and Citibank have all said they would implement these procedures on loans that they fully own. Fannie and Freddie are considering similar procedures.
To qualify certain criteria must be met:

1. It must be a principal residence
2. The loan was taken prior to January 1, 2009
3. The mortgage is delinquent or default is reasonably foreseeable
4. The unpaid principal balance is less than $729,750
5. The borrower’s total monthly mortgage payment exceeds 31% of the borrower’s gross income

Every potentially eligible borrower must be considered for HAFA before the loan is referred to foreclosure. They will automatically refer you to this program within 30 days from the date the borrower:

1. Does not qualify for a trial period modification
2. Does not successfully complete a trial modification
3. Is delinquent on a modification by missing 2 consecutive payments
4. Request a short sale or deed in lieu

If the lender offers it up, the borrower has 14 days to accept this action. There are additional time lines and an initial appraisal up from that is required. The Realtor will have a bottom line number to work with that will encompass all fees for the sale and will be able to properly market to potential purchasers with assurance of acceptance.
Currently we have watched these short sales take months and months. This appears to cut the time line to about 45 days from the time we receive an offer. Additionally there are incentives for the seller who may qualify for up to $1500 in relocation assistance. I know in the beginning the process will be a bit rocky. I just hope that it quickly catches on to All of the lenders and investors out there.