What is HAFA?
HAFA or Home Affordable Foreclosure Alternatives is also referred to as the “April Program”. Under HAFA, participating banks must work with you to help you avoid foreclosure and there are valid reasons, as a consumer, to avoid foreclosure. This government program goes into effect on April 5, 2010 and is about streamlining and giving alternative incentives to foreclosure.
What are the “alternatives” in HAFA?
- Short Sale
- Deed-in-Lieu
Short Sale – If you owe more on your home than it is currently worth, you have to work with a qualified CDPE Realtor to initiate a short sale where the bank will take less than the current balance of your mortgage.
Deed-In-Lieu – This is when the bank agrees to accept the deed of your home instead of (in-lieu of) foreclosure. You don’t get to keep the home but you do avoid foreclosure.
Why should I consider a HAFA Short Sale?
There are several reasons you will want to take a HAFA short sale into consideration starting with the incentive the bank has via the HAFA guidelines to know quickly whether you can or cannot complete a short sale; HAFA makes sure the short sale happens more quickly as the process has been streamline; you may be eligible to receive up to $3,000 in Borrowers Relocation Assistance to help you with your transition; the lender gives up their right to pursue a deficiency judgment against you; and the impact on your credit is considerably less with a short sale as opposed to a foreclosure.
Do I have to hire a real estate professional for a HAFA short sale?
Yes, but you will not have to pay the fess because under HAFA, those fees are deducted from the sale proceeds. You can’t work with any Realtor. The HAFA guidelines specify you must work with a CDFE or Certified Distressed Property Expert as they have undergone specialized training to in foreclosure avoidance options; specifically short sales.
How do I get started?
Your first step is to contact an educated real estate professional with the qualifications listed above. This agent can explain and walk you through the HAFA process, determine f you are eligible or not and provide you with the best solutions available for your particular circumstances.
Do I qualify?
While most homeowners facing verifiable financial hardship can qualify for HAFA, those that can afforest to pay their current mortgage but owe more than the home is currently worth cannot qualify because they are not undergoing financial hardship. The property in question must also be the primary residence and the loan is the 1st lien mortgage. The financial hardship must show that the mortgage is delinquent or default is reasonably foreseeable. Outstanding mortgage is higher than the current market value or the borrowers total monthly mortgage payment exceeds 31% of the borrower’s gross income and the current unpaid balance is equal to or less than $729,750.00.
How long does the process take?
Under the HAFA guidelines, the longest a short sale can take is 5 months. However, distinct timelines that both the bank and you must follow shorten the process as each step has a defined number of days.
If someone contacts me about HAFA, does that mean they are qualified?
Unfortunately, just like many other government programs, there are many people out there attempting to scam desperate homeowners. One of the biggest tip offs is requesting fees up-front. DO NOT pay anyone asking for money up front as all fees are paid out of the sale proceeds and not out of your pocket! A CDPE designated agent will never ask you for money. Go to MakingHomesAffordable.gov to read more about this issue.
Just remember:
- Beware of anyone who asks you to pay a fee in exchange for a counseling service or modification of a delinquent loan.
- Scam artists often target homeowners who are struggling to meet their mortgage commitment or anxious to sell their homes. Recognize and avoid common scams.
- Beware of people who pressure you to sign papers immediately, or who try to convince you that they can “save” your home if you sign or transfer over the deed to your house.
- Do not sign over the deed to your property to any organization or individual unless you are working directly with your mortgage company to forgive your debt.
- Never make a mortgage payment to anyone other than your mortgage company without their approval.
What is foreclosure?
Very simply, foreclosure is when the bank repossesses the property due to lack of payment. Though they cannot just walk in and take it, there is a process defined by each state that they follow to take possession of the property, which leave your credit horribly damaged, your security clearance compromised (if applicable), challenges your current and future employment, AND you may still owe the bank money after everything is said and done. It is a nightmare situation that millions of Americans are finding themselves in today. HAFA has been created to provide alternatives to foreclosure, and CDPE designated agents are trained to help.