Posted by: rgmorgan | April 19, 2010

HAFA what exactly is it and how does it help?

HAFA is the latest government program to help homeowners who are in a financial crisis with their home. They typically owe more than it is worth and/or more than they can afford to pay. What does HAFA stand for? It is an acronym for “Home Affordable Foreclosure Alternatives”. What does that mean? It is not a solution to help people remain in their homes but a program that allows those who do not qualify for HAMP to utilize the short sale process instead of face foreclosure on their home. HAMP is a program that was instituted to help people who qualified to modify their mortgage to enable them to stay in their home. If you do not qualify for this program HAFA may be the best solution for you. Or if you were in HAMP and are delinquent you may also be able to take advantage of the HAFA program.
Why would you want to participate in HAFA and face a short sale or deed in lieu of foreclosure? As explained in earlier blogs the impact of a foreclosure on your credit rating and future ability to purchase a home is much greater than a short sale’s impact. Also, for those lenders and investors who are participating in HAFA they agree that there will be no deficiency judgement. In other words any difference between the amount your house sells for and what is owed will not be a debt that you need to worry about someday becoming your debt.
Another important part of the program are the guidelines that the participating lenders agree to abide by such as timeframes for decisions to be made. I’m sure you have heard of the nightmares where an offer was submitted to a lender and 6 months later they had still not responded. This made it difficult for buyers who needed to know if their offer was accepted and they had bought a house or if they needed to continue looking. Under the guidelines of HAFA a lender will have 10 days to respond to an offer. This will make short sales much more palatable to buyers and sellers alike.
Another important item is the incentives. As a seller you will be eligible for $3,000 at closing to help with relocation. The investors and lenders will also receive incentives to make this work.
Is this the only way a short sale can occur? No the traditional methods of short sale will still be in play and in fact the HAFA program is for conventional loans only so FHA, VA Fannie Mae and Freddie Mac loans will not be eligible.
If you or someone you know is having difficulty staying in their home because of a hardship that has changed their ability to pay this program may be for them. If they have questions about eligibilty or options please have them get in touch with me asap or let me know and I will be happy to discuss their options with them in strict confidence.

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