HAFA Rules Modified in 2011

The Home Affordable Foreclosure Alternatives (HAFA) program debuted last spring to much hype in real estate circles. For homeowners who could not qualify for a loan modification under the Home Affordable Modification Program (HAMP), HAFA could help with other options, such as short sales.

Now, ten months later, only 661 short sales qualified under HAFA. The program is far from a success and has hardly lived up to it’s name: “foreclosure alternatives”. Indeed, if a homebuyer doesn’t qualify for a modification under HAMP or a short sale under HAFA, he could be foreclosed anyway.

The Treasury Department is trying to loosen HAFA’s strict requirements as follows:

1. Banks no longer have to verify that the borrower’s monthly mortgage expense is less than one-third of the Borrower’s income.

2. If a borrower requests consideration under HAFA and it is approved, the bank must provide a short sale agreement within 30 days.

3. Lenders have more latitude in dealing with secondary lien holders.

Hopefully these changes will lead to more approved short sales in the near future! For more information and to determine whether you qualify for HAFA, click here.