Understanding HAFA

Home Affordable Foreclosure Alternative (HAFA)

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.

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.

Learn more about the HAFA program from this video:

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