Is HAFA Helping Short Sales?

Is the Treasury Department’s Home Affordable Foreclosure Alternatives (HAFA) program helping short sales? It was introduced to help borrowers who couldn’t qualify for the Home Affordable Modification Program (HEMP) complete a short sale (as well as expedite the process…which is an oxymoron in and of itself; the government helping private enterprise be more efficient, ha!).

Now, after 15 months, the $4.1 Billion program has disbursed $9.5 million and accounted for only 8,541 short sales. To put that in perspective, during that same time frame, nearly 500,000 short sales were completed across the country. Meaning, a whooping 0.01% of short sales were completed through the HAFA program.

Why so few HAFA short sales?[like-lock]

  1. Lender Lack of Participation: Lenders are not allowed to collect on loan balances when short sales are handled through the HAFA program.
  2. Borrower Lack of Participation: In order to qualify, borrowers must have lived in their home for the past 12 months (no investment properties), have documented and qualifying financial hardship (no strategic defaults), a first mortgage less than $729,750 obtained before January 1, 2009 (sorry California) as well as a host of other requirements.

Ironically, both Lenders and Borrowers stand to gain financially from HAFA short sales. Lenders receive $1,500 for participation in the program and borrowers can receive up to $3,000. A testament to it’s effectiveness…it’s having trouble paying people to participate!

The program is due to expire at the end of next year. Director of policy Laurie Maggiano says the “complex machine” of HAFA will take time to change, but that change is finally, “beginning to happen”.

What do you think?

Is this a good use of our tax dollars? Paying $4,500 for each completed short sale transaction?

Does it need policy reform, or should it be canceled all together?

Is HAFA helping with short sales?[/like-lock]


  1. HAFA success stories are minimal. The program’s been dismal, at BEST. I’m a top-producing realtor/investor in MA & have closed only 2 HAFA short sales, mainly because lenders are incredibly slow to respond. Time is of the ESSENCE people! Real Estate 101!!! These files both took 1yr+ to close & dozens of man hours collecting borrower documents & info & their properties losing over 30% of thier value due to vacancy, neglect or vandalism…

  2. Suzie Crudo says:

    I have yet to have ONE HAFA result in a successful sale.THEIR version of the pricing,and when to reduce and what to reduce the home to is based on a formula.If the seller is unsuccesful in THEIR time frame the seller is AUTOMATICALLY put into a Deed in Lieu situation from prior authorizaton of the program.
    The short sale option is dead.If the agents have not had an offer “THEY ” deem acceptable in their time frame.There are stict income guidlines and qualifications to be part ot the program.Many sellers file for the programs and get accepted,then they move out.My understanding is you must remain in the home and care for it and keep the HOA current which some sellers do not want to do..Only ONE of the files I had actually had the lawyer on the file contact me for discussions on our marketing and approach to obtaining and offer.Most do no even asnwer you,even when you are requesting a reduction.Then the home doesnot sell.Unrealistic pricing,poor customer service,and the unwillingness to accept market value offers are the reasons many of these HAFA sales fail IF they ever get to the point of having early approval.

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