What does HAFA stand for?

HAFA stands for Home Affordable Foreclosure Alternatives

What are the “Alternatives” in HAFA?

HAFA provides two alternatives that will allow you to avoid foreclosure:

• Short Sale – If you owe more on your home than it is now worth, a short sale will help you sell your home and save yourself from financial ruin. According to HAFA, a real estate agent must be involved in this process. Agents with the CDPE designation are specially trained to help you with a short sale.

• Deed-In-Lieu – This is where the bank accepts the deed of your home instead of (“in-lieu of”) foreclosure. You do not get to keep your home, but your mortgage debt is forgiven.

What is foreclosure?

If you are in a financial hardship or cannot make payments on your home, the bank can take your home away from you through a foreclosure, which leaves your credit horribly damaged, your security clearance compromised (if applicable), challenges your present and future employment, and you may still owe money to the bank. It’s a nightmare situation that has been happening to millions of Americans. HAFA has been created to provide alternatives to foreclosure, and CDPEdesignated agents are here to help.

Why should I consider a HAFA short sale?

HAFA sets distinct guidelines and incentives for banks and lending companies so that you will know whether or not you can complete a short sale. One of the common myths about short sales is that they take forever to complete. HAFA makes sure that short sales happen more quickly by streamlining the short sale process.

How is HAFA different from a short sale?

The main issue with traditional short sales was that they took too long, and it was difficult to keep buyers interested in the process. HAFA is a program designed to speed up the short sale process and even gives banks incentives for each short sale they do. Also, after completing a HAFA short sale, you may be given up to $3,000 in Borrower Relocation Assistance to help you transition.

What’s in it for me?

HAFA is the only program that gives you cash for avoiding foreclosure through a short sale or deedin-lieu of foreclosure. If you complete a short sale or deed-in-lieu, then up to $3,000 in Borrower Relocation Assistance may be available to aid in your transition. This program seeks to ensure that no one will be left high-and-dry if they cannot afford their home. The biggest gain of HAFA, however, is that it helps you get your life back if you feel like there are no other solutions when faced with foreclosure.

What are the tax considerations of a HAFA short sale or deed-in-lieu?

The difference between the remaining amount of principal owed and the amount that the servicer receives from the sale must be reported to the Internal Revenue Service (IRS) on Form 1099C, as debt forgiveness. In some cases, debt forgiveness could be taxed as income. The $3,000 Borrower Relocation Assistance may also be reported as income. A short sale may have income tax consequences and/or may have a derogatory impact on your credit score. You should contact the IRS or your tax preparer to determine if you may have any tax liability.

Do I have to hire a real estate professional for a HAFA short sale?

Yes, but it doesn’t cost you anything. Under HAFA, the real estate professional’s fees may be deducted from the sale proceeds. It is a requirement of a HAFA short sale that you work with a real estate professional to help you through the process. CDPE-designated agents understand this process, and are located throughout the country. Find a CDPE at www.cdpe.com to help you get started.

How do I get started?

Your first step should be to contact an educated real estate professional in your area. An agent can walk you through the HAFA process, determine your eligibility, and provide you with the best solutions available for your particular circumstances.

What is a CDPE?

A CDPE, or Certified Distressed Property Expert, is a real estate professional who has undergone specialized training in foreclosure avoidance options, specifically short sales. The education a CDPE receives is based 100% on helping homeowners avoid foreclosure and assisting them through this difficult and oftentimes confusing process. If you are facing a financial hardship and may not be able to make payments on your home, and would like to know more about alternatives to foreclosure such as HAFA, contact a CDPE today.