Did HAFA Work for your client?

By
Real Estate Agent with Century 21 Showcase, REALTORS® CalBRE#01385517
  • Lets start by answering the question..What is HAFA?:

    Treasury Department introduced the HAFA program to provide a viable option for homeowners who are unable to keep their homes through the existing Home Affordable Modification Program (HAMP). The HAFA program took effect on April 5, 2010 and sunsets on December 31, 2012.

    • Complements HAMP by providing a viable alternative for borrowers (the current homeowners) who are HAMP eligible but nevertheless unable to keep their home.
    • Uses borrower financial and hardship information already collected in connection with consideration of a loan modification.
    • Allows borrowers to receive pre-approved short sales terms before listing the property (including the minimum acceptable net proceeds).
    • Requires borrowers to be fully released from future liability for the first mortgage debt (no cash contribution, promissory note, or deficiency judgment is allowed).
    • Uses standard processes, documents, and timeframes/deadlines.
    • Provides the following financial incentives:
      • $3,000 for borrower relocation assistance;
      • $1,500 for servicers to cover administrative and processing costs;
      • Up to $2,000 for investors who allow 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.
  • Requires all servicers participating in HAMP to implement HAFA in accordance with their own written policy, consistent with investor guidelines. The policy may include factors such as the severity of the potential loss, local markets, timing of pending foreclosure actions, and borrower motivation and cooperation.
  • Now, lets review the bottom line facts….did HAFA Work?

    1) Servicers completed 10,438 HAFA short sales  since  April 2010.

    2) Up to June 2011, servicers started 21,412 short sales and Deeds in Lieu of Foreclosure.  A total of 10,754 were completed, up 25%.

    3) JPMorgan Chase  completed nearly 3,600 through the program,  1,000 in June alone.

    4) Wells Fargo  completed nearly 3,100,  700 in June.

    5) Bank of America completed 1,873 HAFA transactions.

    6) In 22% of the HAFA agreements started — equal to roughly 4,700 mortgages — the homeowner began a HAMP trial but later requested a HAFA agreement or was disqualified from HAMP.

    7) According to a recent study there is nearly a 70% INCREASE in the number of homes considered to be part of the banks ‘Shadow Inventory’.

    8) The average time a non-paying ‘home owner’ is able to occupy the property has increased to nearly 600 days nationally.

    So, what do YOU think…did HAFA work? Share your comments…

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Patti Lyles

REALTOR & Short Sale Agent (831) 335-2100, Santa
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