Guidance for The Movement in the Real Estate Market

HAFA Details and Summary

Home Affordable Foreclosure Alternatives

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What is the HAFA program?

It was established by the U.S. Treasury Department per the Treasury Supplemental Directive 09-09, its program implementation date was April 5, 2010 and is set to expire on December 31, 2012, unless it is extended or a new program is introduced.

HAFA is the first program to set much needed nationwide standards for how short sale transactions should be conducted. As a Real Estate professional, I strongly support and appreciate the Treasury Department’s effort to provide structure for banks to consider, process, and complete modification requests and short sales transactions. The HAFA program has increased the volume and success rates of short sales, and is helping to stabilize the real estate market by reducing the amount of homes that will become bank owned. In many instances, a short sale and not a modification would be the best way for a family to avoid foreclosure. Unfortunately the success rates of modifications remain low due to borrower expectations and lack of investor cooperation.

More than 100 servicers of mortgage loans, whose portfolios account for more than 90 percent of the U.S. home loans serviced, are signed up for the HAFA program, which is currently the largest short sale program in the nation.

In April of 2010

The Association of Realtors launched a program for Real Estate professionals to become HAFA certified. I was excited to take the program, I was excited to hear that the government had outlined the short sales process including response times, required documentation, and incentives for the servicer that chose to participate in the program. Prior to the Treasury Department’s directive short sales were difficult and often unsuccessful. Since the passing of the Directive, short sales have now become a large percentage of the homes sales.

Below is the list of documents that lenders need to begin the short sale process, please gather the documents and make an appointment to meet with me to start the process.


List of Documents for HAFA Consideration

  1. 4506T
  2. Current Utility Bill
  3. 2 years of tax returns (2009, 2010) (if the seller has not filed 2010, we need a copy of the extension form faxed.)
  4. 2 months worth of paystubs (if self-employed, 3 month Profit and Loss statement)
  5. 2 months of bank statements (most recent and consecutive)
  6. Hardship letter
  7. RMA form
  8. DODD Frank Cert Form
  9. Listing Agreement
  10. HOA info and last payment made
  11. Purchase contract with proof of funds and/or pre approval letter
  12. Third Party Authorization and Pacific Coast Title Agreement
  13. Lender specific Financial Worksheet form if applicable

HAFA Update

Supplement Directive 12-02 signed that made some changes to the program.

Occupancy Requirements

Time Frame of the HAFA program was expanded to December 31, 2013. The HAFA Short Sale or Deed in Lieu of Foreclosure can be started as late as December 31, 2012; however, requirement would require the transaction to close on or before September 30, 2014.

The Occupancy requirements of the property needing to be an “Owner Occupied Property” has been removed, now owners that have income producing properties can short sale their home too. The property must be owned by an individual and not a business entity.

The payoff amounts that can be approved to the second lien holders have increased from $6,000 to $8,500. This could allow many more owners to come to terms with multiple lenders.

Relocation Assistance

HAFA Relocation assistance of $3,000 will be paid to the primary resident (borrower or occupant) of the property at the time the agreement was signed. The resident will need to vacate the property prior to sale of the property. Vacant properties will not be eligible for the HAFA relocation incentive.

Non-borrowers (Tenant, legal dependent, parent, or grandparent) can now qualify for the relocation incentive if occupying the property at the time when the purchase agreement was signed and would require that they vacate the property upon closing of the sale.

The policy changes are effective June 1, 2012, and will affect properties that are in escrow or any transaction started after that date.

The Borrower will be responsible for requesting and managing the Tenant relocation assistance, including submitting required proof of occupancy and other or additional documentations requested by each of the lenders.

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