Latest HAFA Report Shows Mixed Results

It’s been a while since I’ve written about HAFA (Home Affordable Foreclosure Alternatives Program), and that’s because there hasn’t been much to write about (unless you focus on the ineptitude of taxpayer-funded programs).

According to a recent article on HousingWire.com, the Treasury Department says 10,438 short sales have been completed through HAFA since its start in April 2010.  That’s roughly 600 short sales a month nationwide.

What’s worse is that many HAFA applicants are the same people who opted out or were disqualified from HAMP (the government’s much-maligned loan modification program).  More than 20% of HAFA starts were HAMP applicants at one time.

Many HAFA short sale borrowers are not currently in default, but according to a quote in the article from Pam Marron, a senior loan office with Gold Start Mortgage Financial Group in Tampa:

…people are still employed but severely underwater and are having to short sale because they are not able to pay the vast difference owed between the mortgage amount and the value of these homes.  Banks are requiring homeowners to default in order to qualify for the short sale.

Of course, this typically starts the foreclosure process, and when a HAFA application is eventually denied, the homeowner is too far behind to catch up on their mortgage payments.  This is why an attorney should be consulted before a homeowner decides to go into default.

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