Sincerely,
Jon Griffith, CDPE
Who is Supporting HAFA?
What is HAFA? The Home Affordable Foreclosure Alternatives (HAFA) Program is a government-sponsored initiative led by the US Treasury Department assisting all Home Affordable Modification Program (HAMP)-eligible homeowners in avoiding foreclosure, specifically through short sales or deeds-in-lieu. First introduced November 30, 2009 in Supplemental Directive 09-092 as part of HAMP, HAFA assists eligible homeowners in quickly and effectively implementing short sales by providing financial incentives to lenders that work in conjunction with HAMP to assist homeowners in need. The program was introduced in part with the intent to remove the stigma from short sales and help keep communities from being destroyed through massive foreclosures. HAFA in its current state is only applicable to conventional-type, non-Governmental Serviced Enterprises (non-GSE) mortgages and therefore does not apply to loans owned or guaranteed with Fannie Mae or Freddie Mac. These organizations may have plans to release their own versions of HAFA. Details of HAFA HAFA was introduced to simplify and streamline the short sale process. HAFA accomplishes this in the following ways2: HAFA provides financial incentives as follows: Who Is Eligible for HAFA? Most homeowners in facing financial hardship are eligible. As a rule, if a homeowner is eligible for HAMP but cannot pay the mortgage, then he or she is eligible for an assisted short sale through HAFA. However, loans owned or guaranteed through Fannie Mae or Freddie Mac do not qualify. Servicers must consider possible HAMP eligible borrowers for HAFA within 30 calendar days if the borrower has one or more of the following criteria4 : For a loan to qualify, it must meet the following criteria2: How to Apply For HAFA Homeowners interested in utilizing foreclosure alternatives under HAFA are instructed to contact their lender if they meet the qualifications6 and inform them of their desire to participate. After April 5, 2010 – when HAFA activates – the application process will become more apparent. Since this program will be essentially administered by lenders, a HAFA short sale is analogous to a pre-HAFA short sale. Who is Supporting HAFA? Lender and loan servicers participating in HAFA must have signed a servicer participation agreement with Fannie Mae – the program administrator and financial agent representing the United States in this case – to participate in HAMP by December 31, 2009. Therefore, most lenders are participating. As April 5 approaches, lenders are developing comprehensive programs in order to prepare for the expected flood of applications for short sale agreements and deeds-in-lieu of foreclosure that HAFA will unleash. Bank of America Citibank GMAC Financial Services Lenders Asset Management Corporation (LAMCO) Wachovia Wells Fargo NATIONAL PARTICIPATING SERVICERS Currently, the HAFA Program has not been activated. Therefore, there is not yet an official list of participating lenders. Generally speaking, lenders who participate in HAFA are also participating in HAMP. For a full list of servicers participating in HAMP, visit Making Home Affordable’s Participating Servicers List. Summary The Home Affordable Foreclosure Alternatives (HAFA) Program offers a set of guidelines and financial incentives to lenders in order to streamline and simplify the short sale and deed-in-lieu of foreclosure process. The program is overseen by the US Treasury Department, administered by Fannie Mae and executed by participating lending institutions. On April 5, 2010, the program will activate and run until December 31, 2012, unless extended. The program in its current state does not support loans owned or guaranteed by Fannie Mae or Freddie Mac, but these organizations may implement their own HAFA-based programs in the future.
