The HAFA Program: Foreclosure Alternatives for Homeowners

Assistance available to avoid foreclosure using the HAFA program.

Foreclosure Alternatives After HAFA: What Struggling Homeowners Need to Know

Although the Home Affordable Foreclosure Alternatives (HAFA) program expired in December 2016, the need for foreclosure prevention is more critical than ever. With countless Americans facing financial hardship, missing mortgage payments, or struggling with mortgage debt, understanding your options—including short sales, deed-in-lieu of foreclosure, and loan modification—can make the difference between keeping your home or losing it in a foreclosure sale.

If you're facing foreclosure, it's essential to act early, understand your mortgage rights, and reach out to a HUD-approved housing counselor for free, low-cost support. This guide breaks down the alternatives that remain in place since HAFA’s expiration and how you can still avoid foreclosure and protect your financial future.

🔍 What Was HAFA?

The HAFA program was designed for borrowers who were eligible for the HAMP (Home Affordable Modification Program) but could not qualify for or sustain a permanent loan modification. HAFA offered foreclosure prevention options like short sales and deed-in-lieu of foreclosure (DIL), allowing homeowners to avoid foreclosure proceedings and release liability for their mortgage loan.

While HAFA no longer exists, many of its principles still apply through current foreclosure laws, lender agreements, and mortgage assistance programs.

🏠 Current Foreclosure Alternatives You Should Know

1. Short Sale

A short sale allows you to sell your home for fair market value, even if it’s less than what you owe on the mortgage. Your mortgage servicer must approve the sale, and you may need to submit loan documents and proof of financial hardship.

  • A real estate agent with short sale experience is crucial for guiding the process.
  • The lender agrees to accept less than the full amount owed, often waiving the remaining loan balance.
  • Can prevent the negative impact of a full foreclosure on your credit report.
  • Learn more: HAFA Short Sale Guidelines

2. Deed-in-Lieu of Foreclosure (DIL)

In a deed in lieu, you voluntarily transfer the property back to your mortgage company rather than go through foreclosure proceedings. This option may help you:

  • Avoid costly foreclosure sales
  • Eliminate your mortgage debt
  • Reduce further late fees, lump sum payments, and attorney costs
  • Learn more: Cash for Keys: What is it?

Your lender must confirm the fair market value and may still require that you attempt a short sale first.

A sign in front of house with the text "Avoid foreclosure" showing alternatives for homeowners via the HAFA program.

📋 Qualifications for Foreclosure Alternatives

Although HAFA has ended, lenders and loan servicers may still offer alternatives under similar conditions:

  • You’re having trouble paying your mortgage due to financial problems
  • You've had missed payments or received a default notice
  • You’re not eligible for a loan modification
  • Your monthly payments are unaffordable due to a permanent change in income

If this sounds like your situation, your first priority should be to contact your mortgage servicer directly and request information about their foreclosure prevention options.

🛑 Warning: Avoid Scams and Upfront Fees

Many for-profit companies and scammers claim they can stop foreclosure for a hefty fee. Be cautious of anyone who:

  • Asks for upfront fees
  • Promises to guarantee results
  • Instructs you to stop making partial payments or stop paying your mortgage
  • Fails to provide a written agreement

Instead, work with a HUD-approved housing counselor; they provide free support, help cut spending, and walk you through all available options. You can also submit complaints to your state attorney general’s office or financial regulation agencies if you suspect fraud.

📞 Get Help from a HUD-Approved Housing Counselor

A housing counselor can:

  • Assess your financial situation
  • Review your loan documents
  • Help you apply for loan modification, short sale, or DIL
  • Communicate directly with your mortgage servicer
  • Provide additional resources and budgeting help

You can contact a HUD-approved nonprofit counselor by calling 800-431-8157 or through our website. Many counselors also have experience supporting veterans affairs borrowers and active duty military members.

⚖️ Final Thoughts: Protect Your Home and Your Rights

Being in trouble paying your mortgage is stressful, but it’s not hopeless. There are legal protections in place to prevent foreclosure, and many lenders are willing to work with you—if you take action early.

  • Review important notices from your lender
  • Answer all phone calls and letters
  • Don’t ignore the foreclosure process
  • Learn about foreclosure prevention tools like repayment plans, loan modification, and short sales

If you’re struggling with mortgage debt, don’t wait for fewer options. Reach out today and start building a path forward—because paying your mortgage shouldn’t come at the cost of your peace of mind.

Talk to a housing counselor now »

Jeff Michael
Article written by
Jeff Michael is the author of More Than Money, a debtor education guide for pre-bankruptcy debtor education, and Repair Your Credit and Knock Out Your Debt from McGraw-Hill books. He was a contributor to Tips from The Top: Targeted Advice from America’s Top Money Minds. He lives in Overland Park, Kansas.
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