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12/11/09
The U.S. Treasury has released their long awaited details of the Home Affordable Foreclosure Alternatives (HAFA) program, which provides instructions for lenders and servicers participating in the Making Home Affordable, Home Affordable Modification Program (HAMP). The purpose of HAFA is to create an alternative to foreclosures for homeowners unable to successfully modify their troubled mortgage under HAMP. These alternatives are either a short sale or a deed-in-lieu of foreclosure.
In almost all cases, when a it is clear a homeowner is unable to keep their home a short sale or deed-in-lieu is preferable to a foreclosure as it moves the troubled property expeditiously through the market and does not allow it to sit and become a blight within the community.
The HAFA program simplifies and streamlines the use of short sale and DIL
options by incorporating the following unique features:
• Compliments HAMP by providing viable alternatives for borrowers who
are HAMP eligible.
• Utilizes borrower financial and hardship information collected in
conjunction with HAMP, eliminating the need for additional eligibility
analysis.
• Allows the borrower to receive pre-approved short sale terms prior
to the property listing.
• Prohibits the servicer from requiring, as a condition of approving
the short sale, a reduction in the real estate commission agreed upon in
the listing agreement.
• Requires that borrowers be fully released from future liability for
the debt.
• Provides financial incentives to borrowers, servicers, and
investors. This includes $1,500 for relocation for the borrower,
$1,000 for the servicer to cover costs and a one-for-three matching basis
to help investors payoff subordinate liens (up to $1,000)
The program begins on April 5, 2010, though servicers may choose to implement it earlier. This Directive was only for non-Fannie Mae or Freddie Mac loans up to $729,750.
The Directive also included four standard forms intended to universalize and streamline the short sale and deed-in-lieu process.
Request for
Approval of Short Sale
Alternative
Request for Approval of Short Sale
DIL
Agreement
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Affordable Foreclosure Alternative FAQs
