HAFA: Possible or Impossible?
What is HAFA? Should you pursue it? Are you eligible? Does it work? What are the steps?
What is HAFA:
HAFA stands for Home Affordable Foreclosure Alternatives. It is a program created by the government to provide financial incentives for servicers and borrowers when in pursuit of a short sale or a DIL (deed in lieu) of foreclosure.
Please take less than 3 minutes of your time to watch this excellent resource from the CDPE explaining HAFA: HAFA Explained
I have also created a concise bullet point form of the whole HAFA process, which I have posted here: HAFA Process
Should you pursue the HAFA program?
The main question is: is it in your best interest as a homeowner to pursue a HAFA short sale? This is absolutely up to the homeowners as there are pros and cons to the program. The article above contains a list of these pros and cons.
Are you eligible?
Here is an easy tool to check your eligibility
Check Eligibility Fill out the simple questionnaire from the official HAFA website and it will give you a clear yes or no along with other programs that you may be eligible for.
Does it work?
We at the Seattleshortsaleblog believe HAFA is more promising now with the continuous improvements of their policies. At the end of 2010, according to the overseers of TARP, they reported that only 661 HAFA short sales were completed. Since then, the HAFA policies underwent numerous changes up until their last update on February of 2011. The report from the US Department of Treasury showed 4,488 completed HAFA transactions through Feb of 2011 and also recently released upcoming updates on HAFA policies that will be in effect June 1, 2011.
We believe that the positives outweigh the negatives of a HAFA transaction. The main issue is, however, the second lien holder’s unwillingness to participate in the program. The reason so many secondary lenders were uncooperative previously was because they were not getting the payoff that they desired. The updated policies of 02/11 did much to remedy this issue by eliminating the 6% cap and allowing up to $6000 to go to subordinate lien holders. This of course still does not provide any guarantees but if your short sale is successfully executed via HAFA, you would be in a favorable position. The optimal HAFA transaction is a short sale with only one lien holder, or 1st and 2nd liens both held by the same bank.
What are your steps?
If you decide to pursue a HAFA short sale, please email me at Peter@seattleshortsaleblog.com and I will send you a one page how-to guide within 24-48 hours.
At the SeattleShortSaleBlog, we know there is a plethora of information out there regarding the pre-foreclosure options for your home. If you need any guidance, please feel free to contact our short sale experts for a consultation by submitting your information under the short sale tab. Additionally, you can always email me at Peter@seattleshortsaleblog.com with any questions.
Good luck friends!