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HAFA- really ‘half the time’? Governmental stumbling blocks

A quick review of the HAFA short sale and deed-in-lieu program… Everyone is talking about HAFA. Everyone wants to qualify. But, is it all that it’s cracked up to be?

The Home Affordable Foreclosure Alternatives Program was the program created by our government to provide incentives to those individuals (and mortgage lenders) participating in short sales. For those who have read the 42-page directive (Supplemental Directive 09-09), you would probably agree that the program is designed to aid those borrowers who did not qualify for the HAMP program—the government’s loan modification program. Additionally, the program is also designed to process short sales quickly and efficiently. Maybe that is why they called is HAFA—kind of sounds like ‘half of.’

In general, the program description claims that the main benefits include a 6% commission to real estate agents, a release of deficiency judgment on all liens, and a $3000 seller incentive payable at close of escrow. This program is aimed at owner-occupied properties only, and I urge you to read the directive in order to learn more about the other features of the program.

Uncle Sam’s intentions

While the government’s intentions were probably all good, this program seems to have gotten off to a rocky start. Many borrowers have received letters that imply that they qualify for the program; they submit their documentation and wait and wait and wait. Several weeks later, some borrowers learn that they do not qualify. Why not? Either the first or the second investor lien holder is not a participant.

Another stumbling block to short sales taking ‘half of’ the time is that all of the documentation needs to go through the HAFA underwriting department before moving back to the short sale negotiators. While this is supposed to be a quick process, I have seen this process take upwards of eight weeks.

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To HAFA or not to HAFA?

When sellers consider listing their property as a short sale, I always tell them about the HAFA program. Since the benefits of this program are very desirable, it seems like it would be a good idea for all sellers of owner-occupied properties to consider learning whether they qualify.

That being said, at present know that the HAFA program is still a work in progress—and it is nowhere near ‘half’ the time. Of course, with short sales being so quick and easy to process, who wants to save time anyway? (The last sentence, of course, should be read ‘tongue in cheek’).

Written By

Melissa Zavala is the Broker/Owner of Broadpoint Properties and Head Honcho of Short Sale Expeditor®, and Chief Executive Officer of Transaction 911. Before landing in real estate, she had careers in education and publishing. Most recently, she has been able to use her teaching and organizational skills while traveling the world over—dispelling myths about the distressed property market, engaging and motivating real estate agents, and sharing her passion for real estate. When she isn’t speaking or writing, Melissa enjoys practicing yoga, walking the dog, and vacationing at beach resorts.



  1. Jonathan Benya

    August 17, 2010 at 10:22 am

    NOPE. It’s not really half the time. What makes it more frustrating is that some lenders are now REQUIRING you to apply for HAFA, even when you don’t qualify. Once they agree you don’t qualify, then you need to apply for a normal short sale. Good government intentions have created longer short sale processes in some cases here.

    • Melissa Zavala

      August 17, 2010 at 7:59 pm

      Jonathan: I have had the experience you describe several times. You wait several weeks and learn that the investor isn’t even cooperating. Clearly, this can be very frustrating for buyers and sellers.

  2. gwen banta

    August 19, 2010 at 2:37 pm

    HAFA is short for Half A_ _ ed!

  3. Sandra Rockefeller-Farmer

    August 24, 2010 at 11:51 am

    I am finding that the lenders are using part of the criteria in their short sales but not the whole program, such as the time frame, cutting realtors commissions,. but they are using the limit to the 2nd TD holder. The lenders are again playing with the programs to their own advantage

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