So what is HAFA and how can it help you with your mortgage?
HAFA is a program overseen by the United States Treasury Department and being administered by Fannie Mae. This program is part of the HAMP program (Home Affordable Modification Program) to help eligible homeowners avoid foreclosure through a short sale or deed-in-lieu.
HAFA is designed to get lenders to help homeowners who are eligible to quickly and effectively do a short sale or deeds-in-lieu by providing financial incentives to lenders, investors, and homeowners who provide foreclosure alternatives through the HAFA guidelines.
Why was HAFA Introduced?
HAFA was introduced to remove the stigma from short sales and help keep communities from being destroyed through massive foreclosures.
Who is Eligible?
HAFA, as of today, only available to conventional-type, non-Governmental Serviced Enterprises mortgages and so it does not apply to loans owned or guaranteed by Freddie Mac or Fannie Mae until August 1, 2010.
Financial Incentives
- Financial incentives for banks participating in the program include up to $1,500 servicing bonus upon completion of a short sale or deed-in-lieu.
- Homeowners qualify for $3,000 in Borrower Relocation Assistance after a short sale or deed-in-lieu has been completed.
- Financial incentives for investors include up to $2,000 for those who allow a total of up to $6,000 in short sale proceeds to be distributed to subordinate lien holders.
- Lenders pay all servicing fees-homeowners have no out-of-pocket expenses.
Am I Eligible?
Many homeowners facing a hardship are eligible. If the homeowner is eligible for HAMP and can not pay their mortgage, they are eligible for short sale assistance through the HAFA program. Any loans owned or guaranteed by Fannie Mae or Freddie Mac do not qualify.
Lenders must consider possible HAMP eligible borrowers for HAFA within 30 days if the borrower has met one or more of the following:
- Does not qualify for a HAMP Trial Period Plan
- Does not successfully complete a HAMP Trial Period Plan
- Is delinquent on a HAMP modification by missing at least two consecutive payments
- Requests a short sale or deed-in-lieu
For a loan to qualify, it must meet the following:
- The property is the borrower’s principal residence
- The mortgage is delinquent or default is reasonably foreseeable
- The current principal balance is equal to or less than $729,750
- The mortgage loan is a first lien mortgage originated on or before January 1, 2009
- The borrower’s total monthly mortgage payment exceeds 31 percent of the borrower’s gross income
- The mortgage is not owned or guaranteed by Fannie Mae or Freddie Mac
Who is Supporting HAFA?
- Bank of America
- GMAC Financial Services
- Citibank
- Wachovia
- Wells Fargo