HAFA SHORT SALE UPDATE

Previously we have posted information about the HAFA Short Sale program. Click Here to read the article. While HAFA is less than optimal, it is still our preference as a short sale in most instances. As we mentioned in the earlier blog post, "The Home Affordable Foreclosure Alternatives Program, referred to as HAFA or HAFA short sale, offers homeowners an easier path and various incentives for completing a short sale rather than letting the bank foreclose on their home. It is hoped that HAFA can help to standardize a process that until now has been difficult and unpredictable in many instances. Homeowners who opt for a HAFA resolution typically do not qualify for a trial modification under HAMP, have not successfully completed their trial period, or simply want to sell as an alternative to foreclosure."

The HAFA program took effect on April 5, 2010 and sunsets on December 31, 2012. Here's an update as to how this program is doing.

Servicers completed 1,666 short sales and deeds-in-lieu (DIL) of foreclosure under the Home Affordable Foreclosure Alternatives (HAFA) program in April. That’s up 73.7 percent from the 959 HAFA transactions completed the month before.

HAFA has been in place since April of 2010. According to Treasury’s latest report, which covers program activity through April of this year, a total of 7,113 short sales and DILs have concluded through HAFA.

Treasury says another 7,780 HAFA transactions have been started, meaning an agreement has been put in place between the servicer and the homeowner for terms of a potential short sale of DIL.
Treasury notes that a short sale typically takes 120 days to complete under the program. The number breakdown in the report doesn’t specify how many of the HAFA “starts” are still in process or may have been withdrawn. Any short sale also requires the cooperation of a third-party purchaser, junior lien holders, and mortgage insurers to complete the transaction.

The latest data show that the 10 largest servicers participating in the federal government’s foreclosure prevention programs have completed a short sale or DIL for 82,995 borrowers who did not qualify for a Home Affordable Modification Program (HAMP) trial and 31,048 borrowers whose trial plans were canceled, indicating that servicers are employing their own short sale programs to avert foreclosure for borrowers that don’t fit the mod equation.

Critics of HAFA have urged Treasury to raise the monetary incentive for servicers, investors, and subordinate lien holders, citing low payouts as a common reason HAFA short sales are rejected.

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HAFA SHORT SALE UPDATE

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