HAFA – What Is It?

HAFA Spells Relief … Or Does It?

At the beginning of April, the Federal Government introduced new measures aimed at helping Americans avoid foreclosure. Sort of lost in all of the news about how great the real estate market’s been doing, Home Affordable Foreclosure Alternatives (HAFA), are designed to help struggling homeowners who, regardless of effort to keep their homes, simply can’t afford to.

“A short sale would really help … if only the bank would agree.”

Now, maybe it will. Banks already participating in the Government’s HAMP program are required to participate in HAFA, as well. Mortgage holders have been notoriously difficult to deal with when it comes to short sales. One hand doesn’t know what the other is doing, approvals take virtual eternities (if they ever come at all), homeowners who’re feverishly trying to sell their homes or face the spectre of foreclosure are lost in a sea of confusion about how to proceed in the process.

With a glut of foreclosed homes (over a million at last count), banks are having to rethink their options. Each foreclosure costs banks upwards of $100,000 more than a short sale, but until now, they’ve not been enthusiastic about approving them.
The HAFA program should make things a bit easier on everyone. Whether it’ll work is another matter altogether.

The new guidelines institute a timeline, so that all parties involved will know about what they can expect and when. Sellers will be able to get pre-approval and know what the absolute bottom-line acceptable prices will be. Junior lien holders, who typically get left out in the cold and who are, typically, the factors in denying short sales, will be able to recoup some of their losses. Improvements are definitely being made to the system (although “system” is far too precise a word to pin on the old way of doing things)