Home Affordable Foreclosure Alternatives (HAFA) Program May Make Life Easier for Servicemembers

By OJAG Code 16

Recent changes to the Home Affordable Foreclosure Alternatives (HAFA)
Program make it easier for Servicemembers to qualify. HAFA is a program of
the Departments of the Treasury and Housing and Urban Development that
provides deeds-in-lieu of foreclosure and short sales to eligible homeowners. In
both cases, the amount owed on the mortgage is entirely forgiven, and the
homeowner receives $3,000 in relocation assistance upon closing. To qualify, a
homeowner must:

• live in the home or have lived there in the past 12 months;
• have a documented financial hardship;
• not have purchased a new house within the last 12 months;
• have a first mortgage that is less than $729,750;
• have obtained that mortgage on or before January 1, 2009;
• have a mortgage that is owned or guaranteed by Fannie Mae and Freddie
Mac or serviced by a Home Affordable Modification Program
participating servicer; and
• not have been convicted within the last 10 years of felony larceny, theft,
fraud or forgery, money laundering or tax evasion, in connection with a
mortgage or read estate transaction.

Many banks require financially distressed homeowners to default on their
mortgages before considering a short sale or deed-in-lieu of foreclosure. HAFA
does not require homeowners to actually go into default; instead, homeowners
must simply have a “documented financial hardship.” Previously,
Servicemembers who had not had a decrease in income would not qualify as
having a “documented financial hardship.”

Under HAFA guidance announced on September 29, 2011, a Servicemember who cites permanent change of station
orders as the basis for their financial hardship will now be eligible even if his or
her income has not decreased, so long as the Servicemember does not have
sufficient liquid assets to make his or her monthly mortgage payments. This
change will allow Servicemembers to qualify for a short sale or a deed-in-lieu of
foreclosure without risking their credit scores (and perhaps their security
clearances) by first defaulting on their mortgages.

For more information, please set up an appointment with your local Naval Legal Service Office.

About rlsonw

Navy JAG Corps
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One Response to Home Affordable Foreclosure Alternatives (HAFA) Program May Make Life Easier for Servicemembers

  1. Pingback: Get The Foreclosure Help You Need | Business Unleashed

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