The Home Affordable Foreclosure Alternatives (HAFA) program has three options to help you get out of your mortgage. The first is a loan modification program, to help you stay in your home. The second is a short sale, where your mortgage company agrees to let you sell the house for less than what you owe on it. The third is a Deed-in-Lieu transaction where your mortgage company agrees to take the property title back and forgive the debt.
So what’s the difference between a conventional short sale and a short sale through the HAFA program? One of the biggest benefits to HAFA short sales is that you are completely released from the debt. With conventional short sales and foreclosures, depending on the agreement with your mortgage holder, they may be able to pursue you for the deficiency (the difference between your mortgage amount and the sale price) after the sale of your home. HAFA short sales also typically cause less damage to your credit score than conventional short sales or foreclosures do. On top of that, you get free advice from a HUD-approved housing counselor and in some cases HAFA may provide up to $3,000 to help you with your relocation.
To qualify for the HAFA program, you must meet several qualifications:
- The unpaid amount on your mortgage must be less than $729,750
- Your monthly mortgage payments must be more than 31% of your total current monthly income (this is sometimes flexible).
- The property must be your primary residence (also flexible under new guidelines – sometimes tenants can get relocation incentive dollars).
- You must be able to give documented proof that you have a financial hardship.
- You must have gotten your mortgage on or before January 1, 2009.
- You must be free of any convictions of felony larceny, theft, fraud, forgery, money laundering, or tax evasion in connections with a mortgage or real estate transaction.
Different lenders’ requirements may differ slightly from the above, so if you are considering doing a HAFA short sale, you should contact your lender to see if you qualify for the HAFA program. If you are considering a HAFA short sale you may find the following links to be helpful or give us a call at (520) 481-3695 and we can help you sort through your options.
Make a telephone appointment with a housing counselor.