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Chris Pendleton


Shannan Marty

Associate Broker - Realtor®, ABR®,CDPE, CSP, CNE, CSSN, SFR, a-REO, PSC


You are facing foreclosure. You owe more on your home than it is worth, and you have been told bleak stories of how it will negatively affect your credit score. Take heart. The HAFA program was designed by the US Treasury Department to minimize your losses, and the penalties you will face in losing your home to foreclosure.

Home Affordable Foreclosure Alternatives (HAFA) is the government program for individuals and families having difficulty selling their homes. This US Treasury Department program took effect in April 2010 to aid the housing market. HAFA is called “the government short sale” and has benefits for the homeowner.

You may have tried to qualify, or have qualified for the HAMP program, only to find that you are not going to be able to keep your home.  If either of these two situations applies to you, then read on about the 2009 HAFA program, which was created to help homeowners who have no other option other than foreclosure.

Let’s start off by defining two phrases you will encounter in the HAFA program…’short sales’ and ‘deed in lieu of foreclosure’. A short sale is when the homeowner is permitted to sell their home to another buyer for less than the amount owed on the mortgage loan, and in such a way so as to not subject them to a foreclosure penalty which would show up on, and affect their credit score. A deed in lieu of foreclosure is a deed given by the homeowner to the mortgage company, where the homeowners turn over their home to the mortgage company, in exchange for the forgiveness of the mortgage they owe. The house must be worth as much as the mortgage debt owed, or more than the mortgage debt owed, to qualify.

There are several reasons you should consider the HAFA program as a serious option which will help you cut your losses and reduce the penalties you incur.

First, under the HAFA program, if you have already applied for relief under the older HAMP program, you do not have to re-submit the same information a second time. Second, once approved for the program, you will receive short sales terms before the property is listed for sale, so that there will be ‘no surprises’ and you will know what to expect. Third, when a sale goes through, you are fully released from any requirement to pay any part of the first mortgage, or any deficiencies, or to make any kind of cash contribution.

Provisions of HAFA

  • Offers $3,000 for relocation.
  • Servicers receive $1,500.
  • Investors can earn a 1 to 3 income ratio to allow proceeds to other liens.
  • Alternative for those who are eligible for HAMP, but unable to keep their home.
  • Application uses information collected in the loan modification application.
  • Short sale terms collected before the borrower lists the property.
  • Future liability is released from borrowers on the home.
  • Standard documents and deadlines are used in this process.

Other requirements include:

  • Property must be principal residence.
  • Mortgage must be taken out before Jan. 1, 2009.
  • Default is inevitable.
  • Hardship must be demonstrated.
  • Unpaid loan principal does not exceed $729,750.

There are differences in the program depending upon who owns you loan (i.e. FHA, Fannie Mae, Freddie Mac, VA, Private Investors)