When the federal government first rolled out the Home Affordable Foreclosure Alternatives (HAFA) program, proponents believed that the $4.1 billion program would play a key role in expediting short sales and helping families avoid the painful process of foreclosure. However, more than a year later, HAFA has disbursed only $9.5 million of its funds and completed far fewer short sales than even the most pessimistic analyst predicted[1]. In fact, in 2011, only 8,541 short sales were completed through the program, thanks to lenders’ lack of motivation to work with the program – they are not allowed to collect on loan balances when short sales are handled through HAFA – and a long, frustrating process that drives both buyers and sellers to steer clear. Furthermore, thanks to a much-touted but less-than-effective “black and white” set of requirements for participation in the program, many lenders, however willing, cannot get their borrowers into HAFA programs. In order to qualify for HAFA, homeowners must have lived in their home for the past 12 months, have a documented and qualifying financial hardship and a first mortgage less than $729,750 obtained before January 1, 2009. Not only do lenders receive a $1500 incentive for participation in the program, but homeowners can receive up to $3000 to apply to moving expenses.
HAFA is due to expire at the end of next year, and director of policy Laurie Maggiano hopes to have “a more standardized process and uniform documents for lenders” in place before that time[2]. However, she says, the “complex machine” of HAFA will take time to change, although that change is finally “beginning to happen.” Do you think that HAFA needs changes to policy, or should it just be canceled all together?
Thank you for reading the Bryan Ellis Real Estate Letter!
Your comments and questions are welcomed below.
[1] http://www.kansascity.com/2011/07/28/3042069/federal-short-sale-program-slow.html
[2] http://www.freep.com/article/20110725/BUSINESS04/107250342/Few-homeowners-benefiting-from-federal-short-sale-program
From the front lines, I am extremely sad and anger to report HAMP, HAFA & all other gov’t “help homeowners save their homes” programs have been an abysmal FAILURE!
I could share anecdotal horror stories that would make your head shake in disbelief. No one possibly can imagine banks (i.e. “debt owners”) can be so negligent re: LOSING more money.
That’s exactly what has happened and is happening EVERY SINGLE DAY with property owners trying to save their homes or avoid foreclosure.
It’s VERY common for a property owner facing REAL (and documented) financial hardship to try to short sell, only to have bank foreclose & sell months later for $1,000s (many $1,000s) LESS than higher offer (or even offers) presented to bank months earlier.
Bankers cannot be this stupid (?)
Banks cannot (still) be this overwhelmed…5 years into this real estate fallout.
Yep, HAFA (is) still lagging & ineffective and I have customers whose houses I’m trying to sell to prove just how lagging & ineffective HAFA really is.
Mike Payne
P.S. I am a Sarasota (FL) real estate agent who helps property owners in and around Sarasota (FL) avoid foreclosure. What I have seen and experienced in real estate in the last 5 years is more horror and disbelief than I ever thought or imagined I’d see in a nightmare.
I have been in the HAFA program trying to do a short sale for 9 months and it still hasnt went thru. Even tho I have sent every paper they requested in several times they keep asking for more and no closing date in sight yet. The people that made the offer are about ready to pull out.