HAFA Short Sale Guidelines and Assistance for Realtors

The HAFA program expired in December 2016 and is no longer available.


Taking effect on April 5, 2010, the government’s Home Affordable Foreclosure Alternatives (HAFA) program is intended to provide a viable option for homeowners who are unable to keep their homes through the existing Home Affordable Modification Program (HAMP).

HAFA Realtor Information:

  • RAPID® HAFA Assistance for your Clients
  • HAFA Incentives and Protection
  • HAFA Eligibility and Qualifications
  • HAFA Resources

RAPID® HAFA Assistance for your Clients

As a HUD approved, nonprofit housing counseling agency, credit.org offers free, comprehensive HAFA Short Sale and Deed-in-Lieu (DIL) of foreclosure assistance for your clients. This priority counseling session, known as Realtor Appointment Processing In Demand (RAPID) provides a stream-lined approach to qualifying and applying a homeowner for a HAFA Short Sale or DIL.

HAFA application process

  1. Enter your client’s profile information.
  2. A HUD approved counselor will contact your client within 24 hours.
  3. The counselor will determine if your client qualifies for the HAMP and HAFA programs.
  4. The counselor will teleconference with your client and their servicer to discuss the proposal.
  5. Client housing and mortgage information is electronically sent to the servicer.
  6. A contact person at the servicer will be provided to your client for future inquiries.

Schedule Your Client for a Priority HAFA Appointment »

HAFA Incentives and Protection

HAFA provides incentives and protection for the borrower, servicer and real estate agent when a Short Sale or DIL of Foreclosure is performed on a HAMP eligible loan.

Real Estate Agent

  • Prohibits the servicers from requiring a reduction in the real estate commission agreed upon in the listing agreement (up to 6 percent).

Borrower

  • $3,000 is given to the borrower for relocation assistance.
  • Given standard time frames so that borrowers have enough time to respond at each step of the process.
  • Will be fully released from future liability for the first mortgage debt. Cash contributions, promissory notes, or deficiency judgments are disallowed.

Servicer

  • Receives $1,500 to cover administrative costs.
  • Investors receive up to $2,000 for allowing a total of up to $6,000 in short sale proceeds to be distributed to subordinate lien holders (on a one-for-three matching basis).

HAFA Eligibility and Qualifications

In order for a borrower and their mortgage to be eligible for HAFA, the following 3 qualifications must be met:

1. Mortgage meets HAMP eligibility requirements

  • The property is the borrower’s principal residence, except that the property can be vacant up to 90 days prior to the date of the Short Sale Agreement (SSA), Alternative Request for Approval of Short Sale (Alternative (RASS) or DIL Agreement if the borrower provides documentation that the borrower was required to relocate at least 100 miles from the property to accept new employment or was transferred by the current employer and there is no evidence indicating that the borrower has purchased a one- to four-unit property 90 days prior to the date of the SSA, Alternative RASS or DIL Agreement;
  • The mortgage loan is a first lien mortgage originated on or before January 1, 2009;
  • The mortgage is delinquent or default is reasonably foreseeable;
  • The current unpaid principal balance is equal to or less than $729,750; and
  • The borrower’s total monthly mortgage payment (as defined in Supplemental Directive 09-01) exceeds 31 percent of the borrower’s gross income
  • All HAMP servicers are required to implement HAFA.

2. Borrower has already applied for a HAMP modification
A borrower must first be evaluated for a HAMP modification before any HAFA options are available.

3. Borrower has been denied a HAMP modification
Servicers must consider possible HAMP eligible borrowers for HAFA within 30 calendar days of the date the borrower:

  • Does not qualify for a Trial Period Plan;
  • Does not successfully complete a Trial Period Plan;
  • Is delinquent on a HAMP modification by missing at least two consecutive payments; or
  • Requests a short sale or DIL of foreclosure.

HAFA Realtor Resources

Official HAFA documentation (pdf) contains:

  • Complete program details
  • Form: Request for Approval of Short Sale
  • Form: Alternative Request for Approval of Short Sale

Form: Deed-in-Lieu of Foreclosure Agreement

Our Pre-Purchase Coaching and Home Buyer Education will help you become a successful homeowner.Our Pre-Purchase Coaching and Home Buyer Education will help you become a successful homeowner.

About The Author

Melinda Opperman is an exceptional educator who lives and breathes the creation and implementation of innovative ways to motivate and educate community members and students about financial literacy. Melinda joined credit.org in 2003 and has over two decades of experience in the industry.