New HAFA program guidelines

What is HAFA and how will it help me?

This program is associated with the Home Affordable Modification Program (HAMP) program. It is MANDATORY for any lenders that participate in the HAMP program. It is for homeowners who are having (or anticipate have in the near future) a difficult time making their current mortgage payments on ther primary residence. HAFA provides incentives to qualified home owners as well as lenders, loan servicers and 2nd lien holders.

The 2 main incentives for borrowers are; 1) up to a $3000 "relocation" payment, and 2) being completely released from any amount owed on the mortgage balance as a result of a successful short sale. This applies to both the first mortgage lender as well as the second. Hence, the lenders are not allowed to request for any cash contribution, have the borrower sign a separate promissory note or go after the borrower for the balance by means of a deficiency judgment.

The main qualifying factors are:

• The property must be the homeowner’s principal residence.
• The homeowner is delinquent on the mortgage or default looks likely ( you do NOT have to be in default to qualify for a short sale).
• The loan was made before Jan. 1 2009 and is less than $729,750
• Your monthly mortgage payment is greater than 31% of your gross income

OTHER THINGS you need to know:

• You cannot remain in the home as a tenant after closing.
• You must not be related to the buyer (arms length).
• You cannot earn a real estate commission if you are a licensee and sell the home yourself.
• You may be required to make payments deemed “affordable” by HAFA until your property is sold. This is based on a calculation of your income and expenses.
• You must maintain the property and pay association dues until it is sold.

HAFA streamlines the Short Sale process
Your loan servicer is directed by the HAFA guidelines to consider you for the HAFA program within a month after one of these things happen to you:

• You fail to qualify for a HAMP trial period plan.
• You do not successfully complete a HAMP trial period plan
• You missed at least two consecutive payments on your HAMP modification
• Or...You requested a short sale

Your loan servicer is tasked to communicate to you that you are qualified for a short sale, and you are given 14 days to respond to their notice. If you do not respond within this time frame, you will lose your qualification.
There are also guidlines whereby the lender/servicer will provide you and your agent with a pre-approved short sale price.
You are given 14 calendar days to sign and return a Short Sale Agreement (SSA) to your loan servicer from the date the document is sent to you. Once signed and returned, your lender then allows you to sell your house within a 120 days with the assistance of a qualified Real Estate Agent (Hopefully you choose us).
Within three business days after a purchase offer is received, you or your agent is to submit a completed Request for Approval of Short Sale (RASS) to your loan servicer. Upon receiving the RASS with the complete set of attached documents, your servicer is given 10 business days to advise you whether your request has been approved or denied.
Your loan servicer is not allowed to demand a closing less than 45 days from the date of the contract for sale without your consent. This is mandated so as to give you enough time to move out of the property. Within 10 business days after receiving the short sale proceeds, your lender has to fully release their mortgage lien and the investor has to waive the right to seek deficiency judgments and may not require a promissory note for any deficiency.
This is just a brief summary of the 43 page document ( and numerous supplemental directives). If you would like to discuss your options relating to HAFA or a short sale in general, or would like the full text of the HAFA guidelines, please give me a call or send an email.

Below you'll find a video prepared by the National Association of Realtors explaining the HAFA program:


Thanks for taking the time to read our blog.
Steve Jackson