Although its nickname begs to differ, the federal government’s Home Foreclosure Affordable Alternatives (HAFA) program is actually a full short sale, one of the latest additions to what’s becoming quite a menu of short sales.
The flavor du jour, HAFA was created to streamline the approval process and help the homeowner move on in life by providing financial assistance. Like all government programs, there are rules and qualification requirements. Let’s take a look at some of them.
Advantages of a HAFA Short Sale
The advantages of the HAFA short sale far outweigh those few that exist in the traditional short sale:
- A complete release of the mortgage – there will be nobody chasing after you years down the road for the amount of the mortgage that you still owe.
- You will receive $3,000 to assist in your relocation.
- Department of Housing and Urban Development (HUD)-approved counselors walk you through the process.
- You and your lender work as a team to determine a suitable list price for the home.
- A HAFA short sale doesn’t impact your credit as much as the conventional short sale.
HAFA Eligibility Requirements
If you’re sold on pursuing a HAFA short sale, here’s what you’ll need to verify to be eligible:
- You have lived in the home for the past year.
- You have not purchased another residence in the past 12 months.
- The balance of your first mortgage is equal to or less than $729,750.
- The house is worth less than what you owe on it.
- You obtained your current mortgage prior to January 1, 2009.
- You are experiencing a financial hardship that prohibits you from paying your mortgage payments.
- You have had no convictions, for the past 10 years, for felony theft, larceny, forgery, fraud, tax evasion or money laundering in connection with a real estate or mortgage transaction.
- The home is not condemned.
- Fannie Mae, Freddie Mac or a HAMP (Home Affordable Modification Program)-participating mortgage broker must own your mortgage. To find out if Fannie or Freddie owns your loan, check the Making Home Affordable (MHA) website database. To determine if your mortgage servicer is among those that are HAMP-certified, check the list at this MHA website.
Next Steps
If you feel you are eligible for a HAFA short sale and have decided to pursue one, you will find an application for assistance at the MHA website. The application includes a Hardship Affidavit, an area to list household income and expenses (you will be asked for documentation), and a Dodd-Frank Certification. Completing the certification is a requirement of the Dodd-Frank Wall Street Reform and Consumer Protection Act. It assures the government that you have not been convicted of certain felonies, in connection with a mortgage or real estate transaction, in the past 10 years.
In addition to certifying your lack of a criminal background, the U.S. Department of the Treasury reserves the right to investigate a borrower’s criminal background to confirm the certification.
For assistance with any aspect of the process, HUD provides housing counselors, free of charge, who can help. They can be reached by calling 888-995-HOPE.