What is HAFA?

On April 5, 2010 the HAFA program took effect. At this juncture, many of the country’s major mortgage servicer’s have agreed to participate. The buzz has been very optimistic in the real estate community. The National Association of Realtor’s has been hopeful that this program would lend expediency and transparency to what has thus far been a complicated, difficult, and often time consuming process.



I have several clients that have been solicited by their servicer’s to participate in HAFA. It is becoming ever more clear to me that just as the world of short sales has become much murkier, this program is not the “saving grace” many of us were hoping it would be. The underlying investor guidelines are still being utilized to assess the bank’s willingness to approve a borrower through HAFA. Although on the surface, HAFA appears to offer clear guidelines, if you read the guidelines carefully, there is still a fair amount of discretion for banks to evaluate a borrower’s financial circumstances per the underlying investor’s own independent guidelines.



In cases that I have seen where there are two mortgages this is an issue.  The first mortgage holder approved the borrower through HAFA. However, the same borrower, utilizing the same documentation, was denied by the second mortgage holder. Logically you might ask how can one lender evaluate and approve the borrower and another deny them. Well, it was because the determinations are still being made “per the investor’s guidelines”. This transaction will still be approved. However, the borrower is not going to be eligible to participate in the HAFA program, at least on the second mortgage. In most of the cases I have been involved in, the approval’s on the first mortgage are not an issue. The issues are typically with the second mortgage holder and the borrower’s need for relief from deficiency.

I don’t see there being an extreme difference in how these decisions are being made by the lenders. Of course, this is quite unfortunate. There will be some borrower’s that will easily qualify for HAFA, and this will be a wonderful relief going forward with their lives. However, there will still be quite a few that may be left with the looming prospect of being pursued by their lender’s for a lingering deficiency balance.



Just as the Making Home Affordable Program (HAMP) was not the success that many believed it might be when it was introduced, I am fearful that HAFA may also be a similar disappointment.

Check out the link below for the guidelines of HAFA.
http://www.realtor.org/wps/wcm/connect/8ed80b00412373d29bb6bb08069f8e0c/HAFA+Brochure+Text+1.25.10.pdf?MOD=AJPERES&CACHEID=8ed80b00412373d29bb6bb08069f8e0c
 
 
Keeping you informed.