Home Affordable Foreclosure Alternative, or more affectionately know as HAFA, is a government initiative that was created in 2009. It is designed to assist homeowners who are not able to qualify for or complete a loan modification program, such as HAMP. HAFA is designed to help homeowners avoid foreclosure who meet certain requirements.
Some of the benefits of HAFA:
- Allows borrowers to receive pre-approved short sale terms prior to listing the home
- Requires borrowers to be fully released from future liability for the first mortgage debt
- Provides $3000 in financial assistance for borrower relocation
In theory, HAFA sounds like a great program. Every seller wants a full release from future liabilities when they are considering a short sale, and who wouldn’t want a 3k check handed to them at closing?
However, the requirements to participate in HAFA are ever-changing and vague at best. And although the loan servicers have made a conscious choice to opt into the program it is a government program, which means that sometimes it can be SLOW and painful to move through the HAFA approval process.
Take the following timeline as an example:
3/28 – HAFA paperwork submitted to Bank of America (BofA)
4/25 – Borrower calls to check in and BofA says they can’t find his file
5/23 – Appraisal is complete and uploaded into the system. ***Note, it should typically take 2-4 weeks for an appraisal to be completed and uploaded on an average, (non-HAFA) short sale. This had taken 60 days and a ludicrous number of calls to get to this point.
6/20 – Appraisal value is uploaded, and we have our approved HAFA price (90 days later!)
* Note, this is not short sale approval. 90 days later we received the price that Bank of America had decided we could list and sell the home for; gee thanks.
Eventually this home did close, after 2 more months of negotiating and stalking, I mean following up with Bank of America. That was 5 months after the borrowers initially applied for HAFA. The borrowers did receive their full release and collected their check at closing. Was it worth it? There were many times throughout the transaction where we all would have said, heck no, absolutely not. However, when we closed and they picked up their check and knew they knew they were fully released, they were ecstatic. Was it worth it? In the end it was.
