Home Affordable Foreclosure Alternatives Program (HAFA)

Does anyone remember Home Affordable Modification Program (HAMP)? I didn't think so. HAMP is the government, more specifically Treasury, program to prevent foreclosures. There are approximately 750,000 homes under HAMP, which 30,000 have converted to permanent changes in P&I, or 4%. That immediately tells me that the other 96% do not qualify under the new, so-called lenient guidelines, because these mortgagees don't have the income to qualify and/or they have significant negative equity in their homes.

So, what does they have to do with HAFA? First, HAFA is a supplemental directive pertaining to HAMP that was promulgated in November 2009 for the some 70 Servicers participating in HAMP. (For a list of these Servicers, click on HAMP Servicers.) Second, for those mortgagees who cannot qualify for a permanent mortgage modification while on a trial program (96%), Servicers "are" required to offer "short sale or deed in lieu" alternatives. HARP goes into effect in April 1, 2010. Keep-in-mind that HAMP servicers must offer procedures to mortgagees for short sales or deed in lieu. That is the law!

Now, come the traditional spring selling season for homes, we are going to see a flood of homes that were in HAMP but failed for permanent changes for whatever reason hit the real estate market. Remember that 96% and basic supply and demand from economics. A flood of close to 3/4 of a million homes have the potential to hit the market. Folks, that is just the HAMP program, not counting the inventory of homes being held in foreclosure at our financial institutions. If you need to sell your home within the next year, take heed. That is, get that thing sold within the next six months. If you are planning on buying a home, I would recommend you wait until the smoke clears (late summer of 2010). I know some of you are saying what about that $8,000 first-time home buyers tax credit. Let me say this about that! That $8,000 tax credit may be the most expensive money you have ever received compared to the housing deal that you would obtain had you waited several months and purchased into the supply of "short sales and deed in lieu" homes. The choice is yours. You have been forewarned.