The HAFA Program
Many homeowners struggle to sell their homes. The federal government came to their aid through a program known as HAFA (Home Affordable Foreclosure Alternatives). What HAFA does is help the short sale process for homeowners.
Previously, short sales used to take months before the deal was complete. When the process fails, it results in foreclosure. The HAFA short sale was made effective on April 5th, 2010, and has been operational since then. The government initiated a program’s short sale period of ten days, with the seller pocketing as much as $10,000.
The program became efficient because it streamlined the rules governing short sales. It also offered incentives to both borrowers and lenders. Before HAFA, there was no guarantee on short sales, and the homeowners could not know the decision of the lenders. However, thanks to HAFA, borrowers get pre approval of short sale terms even before availing the home in the market.
How to Determine Eligibility for HAFA
HAFA rules cover lenders who are in the Home Affordable Modification Program, also known as the HAMP. Participation in the HAMP program is voluntary. Before one can enroll in the HAFA program, the homeowner is expected first to send an application for loan modification done through HAMP.
Only when one has missed payments or did not qualify for the change are they eligible for HAFA. Personal residences are eligible for HAMP, and the mortgage amount should not exceed $729,750. The mortgage must also originate before January 1st, 2009.
The PITI payment of the mortgage, including HOA, should be more than 31% of the homeowner’s gross income per month. Finally, to be eligible for HAMP, the borrower must prove that they have suffered hardship, including loss of salary, an abrupt increase in expenses, or have had an increase in a mortgage payment. HAMP has it that one must have the five qualities for them to be eligible. However, not all homeowners who qualify for HAMP qualify for the loan modification.
The homeowners who are not eligible for HAMP or who have, for any reason, failed to pay their modified loans are allowed to make a short sale through HAFA. For HAFA, the eligibility criteria cover personal residences with a mortgage amount of less than $729,750, just like HAMP.
The mortgage origin must not be later than January 1st, 2009. The seller is required to be behind or at least, about to be behind, mortgage sellers who take government loans to qualify for another program. Finally, for HAFA, one must have been rejected or they will not be eligible for HAMP’s modification of the loan.
How To Apply for HAFA
The HAFA rules require lenders to offer their written terms of short sales to all borrowers in 30 days. The borrower is then supposed to respond to the lender within 14 days. During the purchase offer process, the borrower submits the sales contract to their lender within three days together with the mortgage preapproval of the buyer. The status negotiations, as well as any lien hold on the seller, must also be availed. The lender then either approves or declines the offered contract in 10 days.