In 2009, the Treasury Department introduced the HAFA program to provide a viable option for homeowners who are unable to keep their homes through the existing Home Affordable Modification Program (HAMP). The HAFA program took effect on April 5, 2010 and sunsets on December 31, 2012.

Home Affordable Foreclosures Alternatives Program: Guidelines and Forms

HAFA provides incentives in connection with a short sale or a deed-in-lieu of foreclosure (DIL) used to avoid foreclosure on a loan eligible for modification under the HAMP program. Servicers participating in HAMP are also required to comply with HAFA. A list of servicers participating in HAMP (including HAFA) is available upon request

HAFA Provisions

Complements HAMP by providing a viable alternative for borrowers (the current homeowners) who are HAMP eligible but nevertheless unable to keep their home.

Uses borrower financial and hardship information already collected in connection with consideration of a loan modification.

Allows borrowers to receive pre-approved short sales terms before listing the property (including the minimum acceptable net proceeds).

Requires borrowers to be fully released from future liability for the first mortgage debt (no cash contribution, promissory note, or deficiency judgment is allowed).

Uses standard processes, documents, and timeframes/deadlines.

Provides the following financial incentives:

$3,000 for borrower relocation assistance;

$1,500 for servicers to cover administrative and processing costs;

Up to $2,000 for investors who allow a total of up to $6,000 in short sale proceeds to be distributed to subordinate lien holders, on a one-for-three matching basis.

Requires all servicers participating in HAMP to implement HAFA in accordance with their own written policy, consistent with investor guidelines. The policy may include factors such as the severity of the potential loss, local markets, timing of pending foreclosure actions, and borrower motivation and cooperation.

REALTORS® continue to raise issues with NAR about shorts sales and the HAFA process. NAR has created an online mailbox for REALTORS® to share their experiences and provide specific examples of the problems they are facing with lenders. These emails will be collected and used by NAR in its ongoing discussions with lenders and the Treasury Department.

Who is Supporting HAFA?

Lenders and loan servicers participating in HAFA must sign a servicer participation agreement with Fannie Mae — the program administrator and financial agent representing the United States in this case — to participate in HAMP by October 3, 2010 (the previous deadline was December 31, 2009. This was updated March 26, 2010) Therefore, most lenders are participating and those who are not have the opportunity to at any time. Lenders are developing comprehensive programs in order to prepare for the expected flood of applications for short sales and deeds-in-lieu of foreclosure that HAFA will unleash.

Bank of America 

  • Bank of America announced in March its commitment to participate in HAFA when it activates. It has been preparing for a more streamlined process for months though its support of HAMP
  • Bank of America's short sale processor Equator announced the launch of a brand-new best practices software workflow solutions directly related to HAFA
  • Bank of America's HAFA website gives homeowners details on their support of the program


  • Citibank is participating in HAMP, which is a requirement for participating in HAFA
  • CitiMortgage has launched a pilot Foreclosure Alternatives Program that assists its borrowers in avoiding foreclosure by offering a deed-in-lieu that allows homeowners to remain in their homes for six months after they agree to sign over their property deeds to CitiMortgage. The pilot program offers relocation counseling and a minimun of $1,000 in relocation assistance. Currently the program is available in Texas, Florida, Illinois, Michigan, New Jersey, and Ohio.

JP Morgan Chase

GMAC Financial Services

  • GMAC has started a program to preemptively contact borrowers who are not eligible for loan modifications under HAMP and offering alternatives through HAFA and claims a three-day turnaround on short sale applications


  • Wachovia is participating in HAMP, which is a requirement for participating in HAFA

Wells Fargo

  • Wells Fargo is participating in HAMP, which is a requirement for participating in HAFA
  • Wells Fargo has been ramping up efforts to assist homeowners by actively contacting those who are facing hardships
  • Wells Fargo announced on April 14, 2010 their support of HAFA and ongoing support for foreclosure avoidance programs. Wells Fargo has more than 17,400 U.S. staff focused on home retention and foreclosure avoidance.


Servicers that participate in HAFA are also participating in HAMP. For a full list of servicers participating in HAMP, visit Making Home Affordable's Participating Servicers List.

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