Home Affordable Foreclosure Alternatives (HAFA) Short Sale Program

The Home Affordable Foreclosure Alternatives (HAFA) short sale program, effective from April 5, 2010 through Dec. 31, 2016, was a government-sponsored program designed to ease the short sale process for homeowners. The program was discontinued when the market had improved and short sales declined.

Basic Overview of HAFA

  • Does not take effect until April 5, 2010
  • Pertains to 1st Lien Non-GSE Mortgages
  • Utilizes borrower’s financial information through HAMP
  • Financial incentives provided to borrowers, servicers and investors
  • Sets limits on lender response time
  • Lender forfeits ability to pursue deficiency judgment
  • Caps claims of subordinate lenders

Requirements of HAFA

A loan is eligible if all of the following conditions are met:
  • Property is borrower’s principal residence
  • Loan is a 1st lien mortgage
  • Originated before Jan 1, 2009
  • Mortgage is delinquent or default is reasonably foreseeable
  • Current unpaid balance is equal to or less than $729,750
  • Borrower’s total monthly mortgage payment exceeds 31% of borrower’s gross income

Incentives of HAFA

  • $3,000 to Borrowers for relocation costs
  • Will be deducted from gross sale proceeds at closing
  • $1,000 to Servicers for administration and processing fees
  • The servicer may not charge the borrower any processing fees and MUST pay all out-of-pocket expenses
  • $1,000 to Investors for subordinate lien holder payoff
  • For every three dollars spent to release liens, buyer or investor is reimbursed one dollar – capped at $3,000