Thanks for the tip Foreclosure Hamlet!

Now why hasnt anyone heard about this? It isnt even on the HAMP website…

Maybe this is why the “unlimited” credit line for Fannie and Freddie was passed in the dead of night on Christmas Eve

HAMP Update

HAFA – New Program Offers Borrowers Foreclosure Alternatives

Introduction of Home Affordable Foreclosure Alternatives – Short Sale and Deed-in-Lieu of Foreclosure


Supplemental Directive 09-09 provides guidance to servicers on the Home Affordable Foreclosure Alternatives Program (HAFA) and includes the general terms and conditions, evaluation process, documentation, and reporting requirements. As part of the Home Affordable Modification Program (HAMP), HAFA provides financial incentives to servicers and borrowers who utilize a short sale or a deed-in-lieu (DIL) to avoid foreclosure on a HAMP-eligible loan.

Foreclosure Alternatives

The HAFA program simplifies and streamlines the use of short sale and DIL options by incorporating the following unique features:

  • Complements HAMP by providing viable alternatives for borrowers who are HAMP eligible.
  • Utilizes borrower financial and hardship information collected in conjunction with HAMP, eliminating the need for additional eligibility analysis.
  • Allows the borrower to receive pre-approved short sale terms prior to the property listing.
  • Prohibits the servicer from requiring, as a condition of approving the short sale, a reduction in the real estate commission agreed upon in the listing agreement.
  • Requires that borrowers be fully released from future liability for the debt.
  • Provides financial incentives to borrowers, servicers, and investors.

Timing & Eligibility

Servicers – Supplemental Directive 09-09 is effective April 5, 2010, but participating servicers may elect to implement HAFA prior to April 5, 2010, in accordance with the Supplemental Directive. In order to participate in HAFA, a servicer must have executed a HAMP Servicer Participation Agreement (SPA) by December 31, 2009. (The HAMP SPA is available for review on

Borrowers – Servicers must consider a HAMP-eligible borrower for HAFA in accordance with their policies within 30 calendar days of the date the borrower:

  • Does not qualify for a HAMP Trial Period Plan,
  • Does not successfully complete a HAMP Trial Period Plan,
  • Is delinquent on a HAMP modification by missing at least two consecutive payments, or
  • Requests a short sale or DIL.

Note: A borrower must be considered for a HAMP modification and other retention programs offered by the servicer prior to being considered for HAFA.