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The Federal Government’s Home Affordable Foreclosure Alternatives (HAFA) Program went into effect on April 5, 2010 and is designed to provide incentives for borrowers to do a short sale (or a deed in lieu) in order to avoid foreclosure. HAFA assists eligible homeowners in quickly implementing short sales by providing financial incentives to participating lenders.
Updates made to HAFA in 2012 allow a homeowner to remain current on their mortgage, qualify for HAFA, and go through a short sale with less of an impact on their credit. These updates include:
- The deadline for submitting for HAFA eligibility has been extended to December 31, 2013.
- HAFA had required homeowners to have lived in the property within the last 12 months. This requirement has been removed.
- A $3,000 relocation incentive is available, but is limited to properties occupied by an owner at the time of the short sale.
- Mortgage payments are allowed to exceed 31% of the homeowner’s gross monthly income. The effect of this is to allow a homeowner to remain current on her mortgage and still qualify, minimizing the overall potential impact to her credit, and shortening the waiting period to purchase in the future.
- Junior lienholders may receive up to a maximum of $8,500, up from $6,000 previously (these are incentives to junior lienholders).
- New mandates regarding what the lender can state on the borrower’s credit report should lessen the impact on the borrower’s credit rating.
Washington Property Solutions Can Help Guide You Through The HAFA Process
Download a copy of NAR‘s Frequently Asked Questions – HAFA [PDF] or call us at 425-381-2233 for more information.
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Washington Property Solutions
Windermere Real Estate /East Inc.
11100 Main Street, Suite 200, Bellevue, WA 98004