Understanding HAFA - Home Affordable Foreclosure Alternative
  
HAFA (Home Affordable Foreclosure Alternative) was established (April 5, 2010) to assist America’s Homeowners through these troubled times of decreasing home values and finding a “graceful exit” from a bad financial situation.
 
The HAFA program allows you to sell your primary residence if you are “upside down” or in a “negative equity” position.
 
HAFA Guidelines:

What Does HAFA cost me?

  • Nothing, your mortgage company pays your Real Estate Agent.

What does it do for me?

The HAFA program:

  • Allows you to sell your primary residence if you have no equity.
  • Allows you to sell without any penalty or commitments to repay your mortgage company the difference or “Non-Recourse“.
  • Pays you…the seller…up to $3,000.00 for moving expenses or “Cash For Keys”.
  • Pays off your 2nd liens or 3rd liens without any “Re-course” or promise to repay.

How do I apply?

You must use a Licensed Real Estate Agent from your state to initiate the HAFA process

The process may require the following:

  • Financial Worksheet
  • Bank Statements
  • Most Recent Pay stubs or Unemployment Documentation
  • Hardship Letter of Explanation
    • Loss of employment.
    • Relocation of employment (100 miles from primary residence).
    • Death.
    • Divorce.
    • Most life altering circumstances that result in a loss or reduction of income.
  • 2 years Federal Tax Returns or Explanation

How Long does it take?

  • The application process takes up to 10 days from the time all your Short Sale documents are submitted.
  • Once a HAFA approval is received, the sale will take  from 30 to 60 days to close, much ike a standard sale.

How will my credit be impacted?

  • Your credit may report “Satisfied for less than agreed” ,  ”Paid less than agreed”, “Settled”, etc…
  • Your credit score is very subjective and based on your specific debt to income ratio. •Most credit scores are impacted between 50 and 100 points.
  • Late Mortgage Payments or Default in payments may have a greater impact.

What if I owe back property taxes?

  • In most cases, your mortgage company will pay your late or defaulted property taxes.


Will HAFA pay IRS or State tax liens?

  • No, however, the IRS and most states, upon notification and submission of a few documents will allow the property to be sold as long as their is no “gain” to  the seller or what is known as a Short Sale.

Some considerations not covered by HAFA

  • Investor owned, 2nd or vacation homes, vacant land
  • Strategic Short Sale
    • Where you simply want to sell the property to get out from underneath the debt.

For up-to-date information about this program got to /Apps/PageManager/CEIFrame.aspx?URL=www.makinghomeaffordable.gov%2fprograms%2fexit-gracefully%2fPages%2fhafa.aspx&secure=false