What is a HAFA and can it help with the short sale of my Los Angeles Home?
- Do not qualify for a trial mortgage modification under the Making Home Affordable Program
- Have tried but not successfully completed the trial period for their modification;
- Miss at least two consecutive payments during their modification period
- Request a short sale or deed-in-lieu of foreclosure. (If the borrower makes a good faith effort to sell the property but is not successful, a servicer may consider a deed-in-lieu of foreclosure in which the borrower voluntarily transfers ownership of the property to the servicer.)
If you can no longer afford you home and want to avoid the negative effects of foreclosure you should determine if you qualify for HAMP -Home Affordable Modification Program. If you do not qualify for a modification, HAFA could be the right option for you. The Home Affordable Foreclosure Alternatives (HAFA) Program offers financial incentives to encourage and increase participation of mortgage servicers and the investors to complete a short sale or deed-in-lieu of foreclosure in a timely and smooth fashion. The home owner is relieved of the mortgage debt and is also able to walk away with some cash in their pocket. This is different than a ‘regular' short sale in which the seller is not allowed to receive any compensation at all. The amount the seller receives depends on the type of loan they have and which program their servicer falls under.
To be eligible for a HAFA short sale, all of the following requirements must be met:
- Property must be borrower's principal residence
- Loan must be a first trust deed originated before 2009
- Loan must be either delinquent or default must be reasonably foreseeable
- The unpaid balance of the loan must be $729,750 or less for single-family home (or higher amounts for 2-to-4 units)
- Borrower must be eligible for, but unable to complete, a loan modification under the Home Affordable Modification Program (HAMP).