Understanding HAFA and HAMP

HAFA and HAMP are government programs initiated to reduce the negative impact of the falling housing market on the economy. They are programs that relate to GSE (Government Sponsored Enterprise) Mortgages such as FHA and VA.

HAMPHome Affordable Modification Program / a Loan Mod Program

Within the HAMP program, servicers apply a uniform loan modification process to provide eligible borrowers with sustainable monthly payments on their first lien mortgage loans. If the HAMP program cannot be approved, or is offered and not accepted by the borrower, or borrower falls out of a HAMP modification then, a short sale is the next step.

A short sale is an alternative that helps the borrower transition to more affordable housing and avoid the stigma of foreclosure.

HAFA – Home Affordable Foreclosure Alternatives / a Short Sale Program

Short sale and Deed in Lieu of Foreclosure program that is an Opt-in for Non-GSE Mortgages (conventional mortgages). It is automatic for GSE Mortgages as well as VA Compromises for VA Mortgages. Following are some key benefits of the program:

  • HAFA provides financial incentives to servicers and borrowers who utilize a short sale or deed in lieu of foreclosure to avoid foreclosure.
  • Servicers may not require a cash contribution or promissory note and they must also forfeit the ability to pursue a deficiency judgement against the borrower.
  • Allows borrowers to receive pre-approved short sale terms prior to listing the property

Basic Eligibility

  • Home must be the primary residence
  • Must be a first lien mortgage, originated prior to January 1, 2009
  • Must be delinquent or, default must be reasonably foreseeable
  • Current unpaid balance must be equal to or less than $729,750
  • Total monthly mortgage payments must exceed 31% of homeowner’s gross income
Servicers must consider HAFA for HAMP eligible borrowers before the loan is referred to foreclosure or a servicer allows a pending foreclosure to be conducted. The transfer to HAFA from HAMP must take place if the borrower falls more than 2-payments behind or the borrower request a short sale.


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About Toni Hedstrom

I am one half of Hedstrom & Stamm Home Solutions, a dynamic real estate team with emphasis on home marketing utilizing our exclusive Home Ready Program.