The HAFA (Home Affordable Foreclosure Alternative Program) Short Sale program is designed to help homeowners facing foreclosure to “exit gracefully.” There are three different versions of the HAFA Program and the category that you fall into is determined by who is actually the investor behind your mortgage: 1. Private Investors (Hedge Funds, Banks, etc), 2. Freddie Mac, 3. Fannie Mae. FHA and VA loans are not included in HAFA as they have their own programs that work reasonably well.
To find out who owns your loan, you can call your Servicer’s (the company that you pay every month) Customer Service department and ask who the investor is behind your loan. You will also want to ask who your Mortgage Insurance Company is and the certificate number on your file. Another method is to visit Freddie Mac and Fannie Mae‘s sites, both of which have tools to help you uncover if they own your loan. Finally, you can try the public MERS site.
The Documents needed to Apply for HAFA are:
- RMA Form This is the Application for the Making Home Affordable Modification program and the HAFA short sale program
- Listing Agreement with a Real Estate Broker: The real estate fees are paid for by your lender.
- Dodd-Frank Certification
- Last 2 Months Bank Statements for all accounts
- Last 2 Pay Check Stubs – If unemployed and receiving assistance, provide a copy of your benefits letter.
- 2 Years Tax Returns – Signed
- IRS Form 4506-T – filled out requesting 2 years of tax returns
- Recent Utility Bill
- Hardship Letter
- If you have a second mortgage, provide a recent statement from that account
- If Self Employed: 6 Month Profit and Loss Statement
It is extremely important that you take your time and document the information thoroughly.
Most servicers do not administer the HAFA program themselves. As a result, it is critical to call the Loss Mitigation or Short Sale Department to find out who is assigned the file. Bank of America, for example, has at least 2 vendors that only handles HAFA files: AMS and UTLS.
Every page must contain the loan number at the top and should be numbered along with a cover page that corresponds to where each document is.
Once the information has been sent in, the borrower will need to contact the lender for a quick interview. Once that process is complete, the file sent for underwriting, valuation, and approval. I would recommend calling at least 3 times a week during this period as our experience has been the third party companies have some inexperienced staff – some of which tend not to tell the entire truth. Therefore, it is very common to call one day, get a response that is completely different than the response the next day or the day after.