It is important to note that lenders are not required to participate in the Making Home Affordable Program, and those which choose to participate have their own internal guidelines for how the program works within their company. In order to determine what internal guidelines are offered through your client’s lender you will need to contact the lender in question and ask directly.
A participating servicer must consider a homeowner for HAFA if the borrower requests a short sale or deed-in-lieu under HAFA, and a servicer will also consider a homeowner for HAFA within 30 days of the date the homeowner:
- does not qualify for HAMP; or
- does not successfully complete a HAMP trial period; or
- misses at least two consecutive payments on a HAMP modification.
However, before evaluating a homeowner for HAFA, a participating servicer must first consider that homeowner for other loan modification or retention programs that they offer. In addition, pursuant to the servicer’s policies, every eligible homeowner must be considered for HAFA by a participating servicer before the homeowner’s loan is referred to foreclosure and before the servicer may allow a pending foreclosure sale to continue.
With a HAFA short sale, the servicer may not require a cash contribution or promissory note from the borrower and must forfeit the ability to pursue a deficiency judgment against the borrower.
HAFA simplifies and streamlines the short sale process by providing a standard process flow, minimum performance time frames and standard documentation.