TO HAFA OR NOT TO HAFA…THAT IS THE QUESTION!
Our government recently introduced yet another acronym….HAFA or Home Affordability Foreclosure Avoidance . People praise this as a new foreclosure prevention program when, in fact, it is a revision to HAMP or the Home Affordability Modification Program.
Jeff Watson, a short sale attorney, has put together a video blog which breaks down what HAFA is and what it is not. I will include a link to this video at the end of this commentary. According to Jeff, HAFA:
• The home owner decides whether they will participate in HAFA, not the lender
• Not all lenders have opted into the HAFA program
• The lender dictates what price the house is listed for, not the homeowner
• There is no guarantee from the government that the house will sell
• The homeowner must make mortgage payments on the 1st of every month until the house is sold that equals 31% of the gross monthly income of the mortgage holder
• The homeowner must be able to provide the new buyer with clear title. If there are junior liens (mortgages, HELOCs, HOA liens, contractor liens, IRS liens etc. etc.), the homeowner must either pay them in full or negotiate short payoffs with a complete settlement and satisfaction with no deficiency judgment.
• HAFA lets homeowners offer up to 3% of the unpaid principal balance on a lien as full settlement. SO if a homeowner owes $10,000 to a lien holder, they are allowed to offer the home owner a maximum of $300 to fully settle the debt!!
• The homeowner is allowed a maximum of $3000 to fully SETTLE all junior liens!
• The person that buys a HAFA house can’t resell the house for 90 days.
• HAFA gives the government the right to collect very sensitive information from the home owner (see video)
• The homeowner has 120 days to sell the house at the banks price. If they don’t sell it in 120 days they can apply for a longer sales period not to exceed 365 days.
• If they can’t sell the house in 365 days, the homeowner must agree to a deed in lieu if the short sale doesn’t work
• Regarding the infamous “10 days to respond”, this have very specific criteria, terms and conditions (see the video)
So you decide, if HAFA is beneficial to the home owner. The link to Jeff’s video (titled Jeff Watson Breaks Down HAFA)