The Home Affordable Foreclosure
Alternatives Program, known as HAFA, is designed to help borrowers who are unable to retain
their home under the Home Affordable Modification Program (HAMP) or other loan
modification programs. While the first priority is to keep families in
their homes, where this is not possible with a loan modification, they may be
able to avoid foreclosure by completing a short sale or a deed-in-lieu of
foreclosure (DIL) under HAFA.
The HAFA guidelines for short sales are adjusting as of February 1st
2015. The first major change that will benefit homeowners are that may
not be eligible up to $10,000 in relocation incentive if they qualify
for HAFA. Various factors determine a borrowers eligibility for HAFA
such as if the property is occupied, the original loan balance and
origination date, and if the investor participates in HAFA. It’s also
important for a borrower to know that If a tenant is occupying the
property they may be eligible for the relocation incentive.
The 2nd guideline is that they are not allowing up to $12,000 to
subordinate mortgage lien holders. This coupled with a boosted
relocation incentive will reduce the NET proceeds going to the 1st
mortgage. This will likely mean buyers will have to come in with higher
offers or you will see a reduction in relocation incentive to boost the
proceeds to the 1st mortgage on particular transactions. With these new
guidelines transactions may have to be structured differently in order
to satisfy all parties.