The Home Affordable Foreclosure Alternatives (HAFA) Program provides opportunities to all homeowners who can no longer afford to stay in their homes and want to transition to more affordable housing. HAFA also eliminates the mortgage debt they owe without all the negative consequences. This program helps homeowners who have been declined for HAMP (Home Affordable Modification Program) or cannot afford the modified payment.
HAFA provides short sale or deed in lieu of foreclosure options, along with up to $3000 for relocation assistance. This program is highly recommended if you were unsuccessful with a modification. Under HAFA, struggling homeowners may decide between a short sale and deed in lieu of foreclosure to avoid foreclosure.
If you have been declined for HAMP, you must contact your lender immediately to qualify for HAFA. Each lender has specific guidelines that they follow, so there isn’t a set time frame. In some cases, contacting your lender to qualify for HAFA will delay a foreclosure sale. Homeowners who are facing foreclosure may contact their lender no later than 7-Days prior to their foreclosure sale date to qualify for HAFA. In many cases, HAFA will postpone the foreclosure sale date, but you must contact your lender to do so!
HAFA Is Available for Homeowners Who:
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DO NOT qualify for a trial mortgage modification under the Making Home Affordable Program.
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DO NOT successfully complete the trial period for their modification.
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Miss at least TWO consecutive payments during their modification period.
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Request a short sale or deed in lieu of foreclosure.
Foreclosure Alternatives and Incentives under HAFA
The following foreclosure alternatives and incentives are available under the HAFA program.
Short Sale:
In a short sale, the servicer allows you to sell the mortgaged property through a real estate agent. The lender also understands the net proceeds from the sale may be less than the total amount due on the mortgage. Since the lender agrees to take a loss, you will avoid foreclosure once the short sale is complete. In most cases, you will not have any out-of-pocket costs.
Deed in Lieu of Foreclosure:
Generally, if you make a good faith effort to sell the property, but are not successful, a lender may consider a deed in lieu of foreclosure. With a deed in lieu, you voluntarily transfer ownership of the property to the lender—provided the title is free and clear of mortgages, liens, and encumbrances. Deed in lieu should be considered a last resort after all options have been exhausted.
Relocation Assistance:
The HAFA Program streamlines either a short sale or deed in lieu of foreclosure. These options make it easier for you to work with their servicer to avoid foreclosure. Under the program, you can receive up to $3,000 to help with relocation costs (HAFA initially offered only $1500, before being increased to $3000).
Each Lender Is Different
Mortgage servicers and investors write their own guidelines under the Federal Making Home Affordable requirements. Each lender has specific guidelines they use to determine how to implement the HAFA program. Every case is different, so don’t be surprised if you hear about contrasting guidelines when comparing one lender to another.
UPDATE: Changes to Making Home Affordable
Recent changes to the Making Home Affordable Program allow you to simultaneously apply for HAMP and HAFA. This means you can see all of your options up front, and it streamlines the process for both the lender and you—you don’t have to choose to apply for one or the other; you apply for both. The changes to Making Home Affordable have been made at the federal level, but most lenders have not implemented this recent change. Once your lender implements these changes, apply for both HAMP and HAFA to avoid foreclosure. Be sure to follow changes made to the Making Home Affordable Program as they occur frequently.
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