Birmingham Short Sale Real Estate Tip #29, Know HAFA (Home Affordable Foreclosure Alternative), MI Oakland County.

Real Estate Agent with Max Broock Realtors

Short sale rules change quickly and quietly.  What does that mean?  It means that the new directive from the Treasury Department did not make my morning newspaper or was splashed all over CNN.  It was sent by email from FNMA, buried in my junk mail.  Like always Important News never makes the NEWS.

So here is the News, which is GOOD NEWS!!  The Treasury Dept has announced that they have added a new program to HAMP (Home Affordability Modification Program).  HAMP is the program that was created so servicers were able to offer loan modifications for people who were facing foreclosures.  Well, it has not worked as well as they had hoped.  So the new program, HAFA, was created for borrowers who were unable to qualify or keep up with the terms of the trial loan modification, the borrower would then qualify for a Short Sale or Deed-in-lieu.

Now this program is for NON-FNMA and NON-Freddie Mac backed loans.  FHA loans have a similar program that has been in place for years.  Servicers of private backed loans may participate in the program.  Since many of these banks took bailout money, they may be pressured to heed the directive.  The Treasury has introduced incentives for servicers who participate in the progam as a carrot.

As many of you know the ramifications of a short sale are better then that of a Foreclosure, but the borrower can still be stuck with deficiencies and/or a promissory notes.  Plus the servicers can be unhelpful and hard to work with!!  Until now, finally, servicers will reward people who sell their home short instead of walking away from their home. The servicers will also be rewarded for working out the problem instead of closing the door.  It is nice to see that doing the right thing has merit again!!!  Some program highlights below.

Mike Sher


The HAFA program simplifies and encourages short sale and DIL options by:

  • Offering eligible borrowers viable alternatives to avoid foreclosure;
  • Providing a standardized process and time frames for handling viable alternatives;
  • Allowing pre-approved short sale terms before a property is listed;
  • Preventing servicers from attempting to reduce real estate commissions established in the listing agreement as a condition for short sale approval;
  • Releasing borrowers from future liability for the debt; and
  • Providing financial incentives to borrowers, servicers and investors.

Borrowers should be (or request to be) considered for a Home Affordable Modification Program (HAMP) modification and other retention programs before being considered for HAFA.


Details for servicers of mortgage loans that are not owned or guaranteed by the GSEs are provided in Supplemental Directive 00-09: Introduction of Home Affordable Foreclosure Alternatives -- Short Sale and Deed-in-Lieu of Foreclosure, available on, the administrative Web site for servicers.  Fannie Mae will provide guidelines for servicers for Fannie Mae loans in the days to com




Mike Sher                                                                     

Office: (248) 644-4700x242   Fax :(248) 499-1020
4120 Telegraph Rd, Bloomfield Hills, MI 48302

Blog/Profile:  Web:                   

Linkedin:  CDPE:

 he Mike Realtor Team Blog - Metro Detroit/Oakland County

Servicing in Southeast Oakland County, Auburn Hills, Birmingham, Bloomfield, Berkley, Beverly Hills, Canton, Clawson, Farmington Hills, Ferndale, Huntington Woods, Northville, Novi, Pleasant Ridge, Plymouth, Royal Oak, Rochester Hills, West Bloomfield, Troy, etc. We worked with: Bank of America, Country Wide, HSBC, EverHome, Litton, GMAC, Chase, Wells Fargo, Flagstar, Fifth Third, Charter One, Comerica, Am Trust, US Bank, National City

But, We Can Help!

This is a competitive real estate market.  If you have to sell and can not, perhaps it is time to look at a Short Sale.  The Mike Realtor Team has performed dozens of Short Sales for professionals who have lost their job, income has declined, medical problems, relocation, retirement, divorce, loss of spouse, unable to make ends meet, or other reasons not listed.

Comments (5)

Associate Broker Falmouth MA Cape Cod Heath Coker - Falmouth, MA
Heath Coker Berkshire Hathaway HS Robert Paul Prop

This is good timing because rates usually go up in the second year of a presidency.

Dec 08, 2009 07:16 AM
Dan Rosenberger
Harvest Realty - Westfield, IN

These guidelines were just released a few days ago.  I am sure that many lenders will participate.  But the guidelines in most cases are not yet in effect.  We need to be careful to make sure what procedure or guidelines are in effect for any particular short sale. I wouldn't want a seller to think they are selling under the HAFA guidelines and later finds out that those don't apply to that sale.

Dec 08, 2009 07:26 AM
Mike Sher
Max Broock Realtors - Bloomfield Hills, MI


Yes the effective date is April 5th, but a servicer may elect to implement HAFA prior to the April 5th 2010, provided that the servicer is able to collect and report all required information as described in the reporting requirements section on the supplemental directive.  The borrower would also have to fully execute the HAFA agreement as well.  The soonest they can start is December 31st 2009 and the program will run until December 2012.


Dec 08, 2009 07:36 AM
Gordon Baker

Page 1, 3rd paragraph of the directive states, " This Supplemental Directive provides guidance to servicers for adoption and implementation of HAFA for first lien mortgage loans that are not owned or guaranteed by Fannie Mae or Freddie Mac (Non-GSE Mortgages)."

Dec 09, 2009 12:04 PM
Mike Sher
Max Broock Realtors - Bloomfield Hills, MI


Yes non GSE backed loans will have the option to participate in the HAFA program, not sure if all of them will.  It is far easier for the Treasury to require Freddie and Fannie to forgive the deficiency but a private investorgroup may want more then pennies on the dollar before they release the full debt.  Meanwhile BOA just paid back more then 40 billion dollars.  Their recovery is going far better then John Q tax payer.

Dec 10, 2009 12:15 AM

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?