BIG Changes in Store for HAFA Program!

Over the past few weeks, some exciting changes have been made to President Obama’s Home Affordable Foreclosure Alternative (HAFA) program. For those unfamiliar, the HAFA program is a government based initiative that assists eligible homeowners in avoiding
foreclosure by allowing the short sale of a property, or a deed-in-lieu.

According to the Making Home Affordable Program- Extension and Expansion, released March 9th 2012, several improvements to this initiative will become effective on June 1, 2012. These changes will include an extension of the original deadline for HAFA submissions. Originally, the deadline was set for December 31st 2012. However, with the recent changes, the deadline has been extended one full year.  So homeowners now have until December 31st 2013 to submit.

Below are some of the major changes that will take effect June 1, 2012 for HAFA:

1) There are no longer occupancy requirements for HAFA eligibility.

  • The previous version of HAFA required homeowners to have lived in the property within the last 12 months.

2) Secondary lien holders will now be offered $8,500 instead of the original $6,000 in exchange for the full release of the lien.

  • This is a 41% increase in the payout allowed to a subordinate lien holder.

3) The $3,000 relocation incentive will now be exclusively available to owner or tenant occupied properties.

4) Mortgage payments will be allowed to exceed 31% of the borrower’s gross monthly income.

5) Servicer is no longer required to verify financial information (but still can).

6) If the property in question is sold for less than the full balance owed, and the balance is forgiven, the credit bureau will report in one of 2 ways:

 Account Status Code=13 –Paid or closed account/zero balance


65- Account paid in full/a foreclosure was started

What do these changes mean for you? With these changes, more homeowners will be eligible to utilize the HAFA program. Homeowners will now be able to stay current on their mortgage payment and still be able to qualify for the program. In turn, this will help limit the overall impact on credit score. It is also incredibly noteworthy to point out the increase in fund allocation towards secondary liens. With the new 41% increase from what was originally approved, lenders are less likely to decline the short sale due to insufficient fund allocation. In layman’s terms; faster approvals and happier homeowners!

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Phone: 1-888-746-7820