Bank of America is sending out emails confirming that they are participating in the HAFA program, and linking to the N.A.R. description:
HAFA Provisions
- $3,000 for borrower relocation assistance;
- $1,500 for servicers to cover administrative and processing costs;
- Up to $2,000 for investors who allow a total of up to $6,000 in short sale proceeds to be distributed to subordinate lien holders, on a one-for-three matching basis.
Here is the link that provides the details about going from HAMP to HAFA:
The Home Affordable Foreclosure Alternatives (HAFA) Program provides additional options to avoid costly foreclosures and offers incentives to borrowers, servicers and investors who utilize a short sale or deed-in-lieu (DIL) to avoid foreclosures. HAFA alternatives are available to all HAMP-eligible borrowers who: 1) do not qualify for a Trial Period Plan; 2) do not successfully complete a Trial Period Plan; 3) miss at least two consecutive payment during a HAMP modification; or, 4) request a short sale or deed-in-lieu.
In a short sale, the servicer allows the borrower to list and sell the mortgaged property with the understanding that the net proceeds from the sale may be less than the total amount due on the first mortgage. Generally, if the borrower makes a good faith effort to sell the property but is not successful, a servicer may consider a DIL. With a DIL, the borrower voluntarily transfers ownership of the property to the servicer – provided title is free and clear of mortgages, liens and encumbrances. With either the HAFA short sale or DIL, the servicer may not require a cash contribution or promissory note from the borrower and must forfeit the ability to pursue a deficiency judgment against the borrower.
HAFA simplifies and streamlines the short sale and DIL process by providing a standard process flow, minimum performance timeframes and standard documentation.
HAFA is all well and good in areas around the country where Fannie/Freddie loans prevail. We’re on the lookout for any sign that major lenders/servicers are fully releasing borrowers from future liability on non-Fannie/Freddie loans. It may take a while before it filters down, because borrowers have to apply for a HAMP first, and then HAFA. If anyone hears about a policy authorizing full release of a non-Fannie/Freddie deficiency, or pre-approved short sale, let’s us know! Our BofA rep said last week it will depend on the investor, but if you have to process the whole package just to find out, and the answer is no release, who cares – nothing has changed.
I am BUYING a home, after FOUR years of waiting for prices to drop to something reasonable! No more renting and waiting for the market!
Reason: the “honorable” prinicipal reduction efforts through HAMPAFA by my Govt has become the last straw on the camel’s back.
Justification: if the home prices go up, that’s all mine to keep. But if the prices ever, ever fall, I am confident that my mama Govt will take care of me, either by reducing the mortgage rates to 0.05% or sweeter yet, cut the loan to whatever the market value of the home is! Where’s the risk?
Folks – you bet I am upset. I am just a normal citizen like most of you, 100% law-abiding and contract-abiding debtor. But the atrocious, unjust policies of principal reduction by our Govt have turned me off completely. People like me are road-kills with the housing bailout policies. Silly me, here I am, naively paying off my debt while my Govt is bailing out irresponsible megabanks, buying trillions of MBS using printing press to keep 30-year rates at 4.9999%, and bribing lenders to turn a blind eye to perpetual mortgage defaulters. To top it all, cut mortgage principal to “whatever” the poor borrowers can afford – at the taxpayer’s expense! Hello???
I see it now. It’s just a game. How you play is all that matters, not free markets, good citizenry, good credit etc. I am BUYING a home, closing my eyes, as I have nothing to fear, with my Govt as my backstop. Shame on me for having to decide this way after 32 years of being a responsible debtor citizen, but hey, repeat after me: “Principal reduction available for irresponsible borrowers and banks. Please apply here!”
With this principal reduction, my Govt may have envisioned keeping the current strategic defaulters from walking OUT. Great! But, the unintended consequence of that are people like me – I am a possible future strategic defaulter, walking INTO the trap (un)knowingly.
Call me when my Govt exits the housing market. May be, I will sell or short-sell then, and rent again. God Bless my Govt. Gotta go – I am BUYING a home!
repo110,
Good call! Do it with an FHA loan so you only have 3.5% down and walking away is painless.
repo110,
I think you’re buying for the wrong reason, but if you are going to buy do it exactly as WC states — as little as possible down and ready to walk away at the drop of a hat.
p.s.: There *are* right reasons to buy, it’s just none of them apply to me right now.
It is not discussed much, but a federal exception to state law anti-deficiency purchase money protection are loans federally funded or insured.
So walking away from an FHA loan may not be as painless as you think.
Kingside: really? do you have a link?
repo110: congrats, but really you are not “buying a home”, but just signing up for a mortgage for a house, unless you are paying cash.
Federal preemption of state anti-deficiency rules can be complicated but it has been litigated in the FHA, VA and SBA loan context.
Not sure you can find this online without a lexis/westlaw subscription, but the case California FHA borrowers should fear is Herlong-Sierra Homes, Inc. v. United States, 9 Cir., 1966, 358 F.2d 300 (1968).
If you want to explore how the courts grapple with these preemption issues via a link on line, here is a link to a similar type decision where it was held that FHA trumps inconsistent idaho foreclosure law. United States v. Stadium Apartments, Inc. (9th Cir. 1970) 425 F.2d 358. It is pretty complicated stuff for non-lawyers.
http://openjurist.org/425/f2d/358/united-states-v-stadium-apartments-inc
HAFA does NOT apply to Freddie Mac and Fannie Mae owned or securitized loans. The money that the govt. is providing for incentives is chicken feed in most transactions.
Bottom line is that very few loans qualify and very few short sales will really be influenced. So… everybody.. don’t get your panties all wadded up.
Every time a house gets through a short sale quickly at legitimate market value it helps the market.. me thinks. It may be only a few but, if it works, it will be a lot quicker than Default, Trustee Sale, Back to Bene., REO, Market, sale.
But that is just my opinion.. I could be wrong.
I had a significant pay cut for which I decided to accept another job and needed to move out of my property. I have an excellent potential buyer and I submited all documents to the mortgage company. According to the HAFA supplemental directive I do qualify for HAFA; however, the negotiator of the mortgage company seems to be misinformed and insists that HAFA is for government loans, which contradicts what is indicated on page 1 of the supplemental directive. Please advise, thanks.