President Obama Officially Launches HAFA Short Sale Program
The Obama Administration and the U.S. Treasury Department officially activated the HAFA (Home Affordable Foreclosure Alternatives) program from the 5th of Aprilâ€™ 2010, which gives struggling homeowners incentives to take advantage of two alternative options to foreclosure.
Through the program, homeowners are encouraged to do a short sale - in which the borrower and the mortgage servicer agree to sell the home for less than the value of the loan. They can also do a deed-in-lieu of foreclosure, in which the homeowner voluntarily gives the deed of the property to the servicer
Incentives include being fully released from future liability for the first mortgage debt, and $1,500 for borrower relocation assistance. There are also incentives for investors and the lenders.
As the United States continues to experience one of the worst economic downturns ever, foreclosure filings continue to rise - especially amongst minority families. In 2009, a record 2.8 million homes went into foreclosure, and the filings in 2010 are estimated to reach up to 3.5 million. Experts say that foreclosure activity will likely remain high until at least the end of 2012.
Although controversial amongst many industry leaders, some are optimistic that the HAFA program can drastically reduce the amount of foreclosure filings and rebuild the housing marketing one mortgage at a time. Homeowners find the program attractive because it does not affect their credit report as adversely as a foreclosure does.