The Home Affordable Foreclosure Alternatives (HAFA) Program includes two options:
In a short sale, the servicer allows the homeowner to list and sell the mortgaged property and agrees to accept the net proceeds from the sale even if the proceeds are less than the total amount due on the mortgage.
Deed-in-Lieu of Foreclosure
Servicers may also offer to accept a deed-in-lieu of foreclosure through which a homeowner voluntarily transfers ownership of the property to their servicer. Many servicers require homeowners to try to sell their home before they will accept a deed-in-lieu.
HAFA is available for homeowners who have a verifiable financial hardship and:
- Do not qualify for a mortgage modification under the Making Home Affordable Program;
- Do not successfully complete the trial period for their modification;
- Miss at least two consecutive payments once in a permanent modification; or
- Request a short sale or deed-in-lieu of foreclosure.
Your mortgage servicer can give you more information about your eligibility.
If you have other loans against your house, you will need to work with your servicer to negotiate the release of those loans in order to complete the short sale or deed-in-lieu. HAFA helps by providing some funds to pay off junior loans.
Unlike the process for many short sales and deeds-in-lieu of foreclosure, HAFA sets clear timelines to keep the process efficient.
Mortgage servicers must evaluate homeowners for HAFA within 30 days after one of the eligibility criteria is met. If the homeowner is eligible, the servicer will send a Short Sale Agreement (SSA) 'a contract between the homeowner and the servicer' that will include:
- A list price approved by the servicer;
- The length of time the property will be marketed for sale;
- An agreement releasing the homeowner from all future liability after the property is sold;
- The amount of the monthly mortgage payment, if any, that the borrower will be required to pay during the term of the SSA;
- Information about $3,000 in relocation assistance after closing; and
- An agreement that so long as the borrower performs in accordance with the terms of the SSA, the servicer will not complete a foreclosure sale.
If a servicer is willing to accept a deed-in-lieu of foreclosure, they will provide a HAFA deed-in-lieu agreement.
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