I have been asked a number of times in the last two weeks what HAFA is, what are the new guidelines, and how will the legislation affect the way that we buy and sell real estate? The acronym stands for Home Affordable Foreclosure Alternatives Program. It is slated to be put into effect on April 5th 2010. It is a mammoth 43 page document that details all of the new guidelines that banks, who took TARP money are going to be required to follow. I am going to give an overview of the changes. First, it will work in conjunction with HAMP (Home Affordable Modification Program) by working with the existing HAMP financial hardship documentation already collected. Second, it also gives a viable alternative to consumers that are eligible for HAMP but can’t afford the modification. Third, it allows borrowers to receive preapproved short sale terms before the property is listed. Fourth, it also prohibits the servicer from lowering a Realtors commission that is agreed on the listing agreement, up to 6%. Fifth, it releases the borrower from any liability by the servicer. NO cash contribution, deficiency judgment, or promissory note is allowed. I will conclude my examination of the new HAFA guidelines in the next weeks Blog.

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