First of all, I am sorry that your family is going through cancer. It' very admirable of you to care for your FIL.
In response to your question, HAFA is for primary residences purchased on or before January 2009. I hope you already have given Karen a call to discuss privately. I can see from your posts that you are considering all options available. There are a number of questions that need to be asked in order to properly brainstorm strategy and this may not be the appropriate forum as it is so public and your situation is so private.
Also inspire.com offers so much relevant information from people battling cancer and their care takers. You might be able to find information on additional financial assistance-- certainly emotional support and treatment options from others on the wonderful forum.
Please feel free to contact me if I could be of assistance. My best to you and your family.
Prudential California Realty