New Home Affordable Foreclosure Alternatives Program

December 07, 2009
Author: HomePath.com

On November 30, 2009, the U.S. Department of the Treasury announced the Home Affordable Foreclosure Alternatives Program (HAFA), which provides financial incentives to servicers, borrowers, and investors for a closed short sale or a deed-in-lieu (DIL). HAFA encourages foreclosure alternatives to costly and expensive foreclosures.
Details for servicers of mortgage loans that are not owned or guaranteed by the GSEs are provided in Supplemental Directive 00-09: Introduction of Home Affordable Foreclosure Alternatives -- Short Sale and Deed-in-Lieu of Foreclosure, available on HMPadmin.com, the administrative Web site for servicers. Fannie Mae will provide guidelines for servicers for Fannie Mae loans in the days to come.
Real estate professionals working with short sales should review the Short Sale section of the Supplemental Directive (pages 5-9) and review the forms and letters in Exhibits A and B.
Supplemental Directive 09-09 is effective April 5, 2010, but participating servicers may elect to implement HAFA prior to April 5, 2010, in accordance with the Supplemental Directive.
The HAFA program simplifies and encourages short sale and DIL options by:
• Offering eligible borrowers viable alternatives to avoid foreclosure;
• Providing a standardized process and time frames for handling viable alternatives;
• Allowing pre-approved short sale terms before a property is listed;
• Preventing servicers from attempting to reduce real estate commissions established in the listing agreement as a condition for short sale approval;
• Releasing borrowers from future liability for the debt; and
• Providing financial incentives to borrowers, servicers and investors.
Borrowers should be (or request to be) considered for a Home Affordable Modification Program (HAMP) modification and other retention programs before being considered for HAFA.
For more information about HAFA, read the Supplemental Directive using the link above or find this and other Making Home Affordable information at HMPadmin.com.