New HAFA program to save 1000's from Foreclosure

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New HAFA program is poised to help struggling homeowners who are facing foreclosure and can not modify their loan through Making Home Affordable (HAMP). This new program will streamline the short sale process into a very manageable program with standardized forms, process and timelines for lenders to follow. Sellers will be able to receive a 1500 moving allowance.We have downloads of the sample forms for this new program set to launch April
5, 2010.

HAMP (Making Home Affordable) has announced their new initiative, HAFA program set to start April 5 of this year. Home Affordable Foreclosure Alternatives is poised to help homeowners who are facing foreclosure, short sale their property. A short sale is a special transaction where homeowners can sell their property for market value even if they
owe more on the home than it is worth. The HAFA program is set to streamline the frustrating process of the short sale.

The Treasury Department, in Supplemental Directive 09-01, has announced the underwriting, elegibility and servicing requirements in their 43 page printout.

In simple terms, this program is for homeowners who were unsuccessful in modifying their loan through the Making Home Affordable Program (HAMP). This will allow homeowners now faced with foreclosure, to short sale the home with a predetermined listing price from the bank. If the property does not sell the homeowner would then have the Deed in Lieu of Foreclosure alternative, also part of HAFA program. With either the HAFA short sale or DIL, the servicer may not require a cash contribution or promissory note from the borrower and must forfeit the ability to pursue a deficiency judgment against the borrower.

Another nice part of this program is a borrower will receive $1500.00 from the proceeds of the sale to help with moving expenses. They will also allow up to 3,000 to your second loan if applicable. The foreclosure process will continue during the process, HOWEVER, the foreclosure sale will be on hold during this time.

A few key points of the HAFA Program will help simplify the process by:

Utilizes borrower financial and hardship information collected in conjunction with HAMP, eliminating the need for additional eligibility analysis.

Allows the borrower to receive pre-approved short sale terms prior to the property listing.

Requires that borrowers be fully released from future liability for the debt.

Uses standard processes, documents and timeframes.

Provides financial incentives to borrowers, servicers and investors.

Homeowners must first try to qualify for the a HAMP modification prior to being considered for HAFA. Borrowers that meet the eligibility criteria for HAMP but who are not offered a Trial Period Plan, do not successfully complete a Trial Period Plan, or default on a HAMP modification should first be considered for other loan modification or retention programs offered by the servicer prior to being evaluated for HAFA.

In accordance with the provisions of Supplemental Directive 09-01, a loan meets the basic eligibility criteria if all of the following conditions are met:

The property is the borrower’s principal residence;

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

The borrower’s total monthly mortgage payment (as defined in Supplemental Directive 09-01) exceeds 31 percent of the borrower’s gross income.

Servicers also must notify HAMP eligible borrowers for HAFA within 30 days of the date the borrower doesn’t qualify for trial period plan or doesn’t complete the trial period (on the loan modification), is late on 2 payments once the borrower is on the trial modification or if they request a short sale.

Here are the sample forms from HAFA that are intended for loan servicers to use. These are a rough outline for the loan servicer’s to insert their own information.