HAFA Brings Relief to Distressed Homeowners

What is HAFA?

HAFA is a government-subsidized Home Affordable Foreclosure Alternatives program for distressed homeowners to sell their homes to avoid foreclosure, even if the sales price is not enough to pay off their existing mortgage loans. Under HAFA, a participating lender will pre-approve the terms of a short sale and give the borrower at least 4 months to market and sell the property using a licensed real estate professional.


The eligibility requirements for a HAFA short sale include the following:

• Property must be borrower’s principal residence;

• Loan must be a first trust deed originated before 2009;

• Loan must be delinquent or default must be reasonably foreseeable;

• Current unpaid principal balance must be $729,750 or less for single-family home (or higher amounts for 2-to-4 units); and

• Borrower must be eligible for, but unable to complete, a loan modification under the Home Affordable Modification Program (HAMP).

Financial Incentives

The government incentives under HAFA are as follows:

• $3,000 to borrower for relocation expenses;

• $1,500 to servicer for each successful short sale; and

• $1 reimbursement to investor for every $3 paid to extinguish junior liens, up to $2,000 maximum, and not to exceed 6% of unpaid balance.

Effective Dates

April 5, 2010 to Dec. 31, 2012.

HAFA Procedures

The general standardized procedures for HAFA short sales are as follows:

Step 1: Lender evaluates borrower for a loan modification under HAMP.

Step 2: Lender evaluates borrower unable to complete HAMP modification for short sale.

Step 3: Lender issues Short Sale Agreement (HAFA SSA).

Step 4: Borrower lists the property for sale using a licensed real estate agent.

Step 5: Borrower and agent market and sell the property.

Step 6: Borrower submits to lender a Request for Approval of Short Sale (RASS).

Step 7: Lender approves RASS within 10 business days. Step 8: Sale closes escrow.

*See Addendum for Estimated HAFA Timeline

Lender’s Evaluation

Each participating lender will have its own written policy for approving or rejecting a HAFA short sale, based on factors such as the severity of the loss, market conditions, the borrower’s motivation and cooperation, property valuation, and title review.

Short Sale Agreement (HAFA SSA)

The Short Sale Agreement (HAFA SSA) will include, among other things, the following:

• Either a list price or net proceeds acceptable to the lender;

• An agreement to fully release borrower from all liability for repayment of the loan;

• An agreement not to complete a foreclosure sale if borrower complies with SSA;

• Amount of acceptable closing costs and up to 6% real estate commission.

• Notice that the sale must be an arm’s length transaction; and

• Notice that the buyer must agree not to resell the property within 90 days of closing.

Tax, Credit, and Other Consequences

A HAFA short sale may have serious tax, credit, financial, legal, and other consequences.  A homeowner is strongly encouraged to seek the advice of a qualified professional regarding these consequences.

Participating Lenders

A list of participating lenders is available at http://makinghomeaffordable.gov/contact_servicer.html. Fannie Mae and Freddie Mac have their own HAFA guidelines for their loans.

More Information

http://makinghomeaffordable.gov/hafa.html.  See also, Supplemental Directive 09-09 dated March 26, 2010 available athttps://www.hmpadmin.com/portal/docs/hafa/sd0909r.pdf.

This chart is just one of the many legal publications and services offered by C.A.R. to its members.  For a complete listing of C.A.R.’s legal products and services, please visit www.car.org.

Readers who require specific advice should consult an attorney.  C.A.R. members requiring legal assistance may contact C.A.R.’s Member Legal Hotline at (213) 739 8282, Monday through Friday, 9:00 a.m. to 6:00 p.m. and Saturday, from 10 a.m. to 2 p.m.  C.A.R. members who are broker-owners, office managers, or Designated REALTORS® may contact the Member Legal Hotline at (213) 739 8350 to receive expedited service.  Members may also submit online requests to speak with an attorney on the Member Legal Hotline by going to http://www.car.org/legal/legal-hotline-access/.

Written correspondence should be addressed to:

CALIFORNIA ASSOCIATION OF REALTORS®Member Legal Services525 South Virgil Avenue Los Angeles, CA 90020 

Article courtesy of California Association of Realtors.

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About Ron Jesser Realtor

I'm All About Real Estate And I Know The Desert! After 14 years of selling, I better!   When selecting a Realtor or real estate agent, a thorough knowledge of the community, strong negotiation skills, and a commitment to excellent service are all skills you’ll want on your side of the table. Experience counts!

 With great experience as a Palm Springs Realtor and extensive knowledge as a Realtor servicing Rancho Mirage, Cathedral City, Palm Desert, La Quinta, and Indio, I help both buyers and sellers meet their real estate objectives. I will work tirelessly on your behalf by being available to you when you need me to answer questions, provide information or ensure our deal is progressing smoothly; by having a solid team ready to take care of any need or request that comes our way and by providing any resource necessary to make your transaction trouble free. Sellers—I am committed to selling your home or property in a timely fashion and at the highest possible price. If you are interested in receiving a free home valuation, I encourage you to fill out my free Home Valuation Form or check out my Dream Home Finder at www.RonJesser.com Buyers—I will work with you to find your ideal home at your ideal price. Let’s narrow down what you are looking for, so we can begin the home showing process and get you a closer look at what these communities have to offer. No matter what it takes, your next home buying or home selling experience will be an enjoyable and successful one because I will be doing the work for you. And by working tirelessly on your behalf, as a team we will make your next home buying or home selling experience an enjoyable and successful one. 
 Remember—I'm not here just to find you a home. I'm here to help you find a life you will love! Thank you for considering me as your Realtor. Please call or email me if you have any real estate questions about Greater Palm Springs. DRE# 01280106
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