Federal Government HAFA Program, Treasury HAFA Program

It's been over a year since the federal government first rolled out HAFA. The national program to help streamline the short sale process. It was recently reported in the Miami Herald that few homeowners are benefiting from it, and real estate agents are wondering whether it will ever gain traction.

The Herald reported that HAFA, has disbursed just $9.5 million out of $4.1 billion from April 2010 to December 2010, according to a Government Accountability Office report in March. Through May of this year, only 8,541 short sales were completed nationwide through HAFA.

So why isn't HAFA working? According to the Miami Herald," HAFA isn't working because it doesn't allow lenders to collect on the loan balance, and incentives - including $1500 to the lender aren't enough to entice banks to go along with the program. Investment properties are not eligible for HAFA and, in Florida, loans backed by Fannie Mae are disqualified if the homeowner has already received a foreclosure notice." 

We have seen second mortgages say they will take what HAFA allows them on the HUD but they still want to collect additional monies from either the Buyer or the Seller or they will not release their lien. We have seen loans denied for HAFA because the Mortgage Insurance company would not go along with the program. I have even asked representatives from Wells Fargo (Wachovia) and Bank of America if MI can overrule HAFA and I have never gotten a straight answer. 

At a recent seminar with Bank America, a Vice President of Bank America said that HAFA is merely a brand, and he went one step further an likened it to Nike.  It is just one of many short sale programs available to homeowners and not necessarily the best for the individual underwater homeowner.  He has suggested that when you take a short sale listing, your first step should be to have the homeowner ask the Bank what short sale programs his loan qualifies for as there are many different programs out there.

The HAFA program expires at the end of next year, and by them, the US Treasury hopes to have a model process and uniform documents that banks could use. We can only hope that this can be accomplished before this time!