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Home Affordable Foreclosure Alternatives


All lenders and servicers who have signed up for the HAMP Program must participate in the HAFA program. For a complete list, see: http://makinghomeaffordable.gov/contact_servicer.html

Loan Eligibility Criteria for HAFA:

  • The loan must be secured by borrower’s principal residence (unless borrower had to relocate more than 100 miles away for employment reasons and has not purchased another property.
  • It must be a first lien mortgage originated prior to January 1, 2009.
  • The mortgage is delinquent or delinquency is reasonably foreseeable.
  • The unpaid principal balance is no more than $729,750 for a single-family residence (higher limits apply for 2-4-unit multi-family dwellings).
  • The borrower’s total monthly mortgage payment exceeds 31% of the borrower’s gross income.
  • Unencumbered assists or significant cash reserves equal to or greater than 3 times the borrower's monthly payments (PITI) or $5,000 whichever is greater.

HAFA Incentive Compensation:

  • Borrowers: UP TO $3,000 (relocation assistance)
    Servicers:    $1,500
    Investors:    $2,000 (maximum reimbursement for payments to junior liens)
    Junior Liens:    $6,000 (but can be no more than 6% of the unpaid principal balance).
  • All lien holders who agree to participate in the HAFA short sale must release the borrower  from all deficiency liability if the HAFA short sale closes.

Borrowers are eligible for HAFA if they are eligible for the HAMP program, but:

  • Do not qualify for HAMP.
  • Fail to complete a HAMP modification.
  • Do not accept HAMP loan modification.

What else should I know?

  • The deal must be "arms length". Borrowers cannot list the property or sell it to a relative or anyone else with whom they have a close personal or business relationship.
  • The amount of debt forgiven might be treated as income for tax purposes. Under a law expiring at the end of 2012 however, forgiven debt will not be taxed if the amount does not exceed the debt that was used for acquisition, construction, or rehabilitation of a principal residence. Check with a tax advisor or the IRS.
  • The servicer will report to the credit reporting agencies that the mortgage was settled for less than full payment, which may hurt credit scores.
  • Buyers may not re-convey the property for 90 days (no "flipping").


The Mendoza Team

Keller Williams Realty Sonoran Living | Each Office Independently Owned and Operated
4001 E. Mountain Sky Ave , Suite 105 • Phoenix AZ 85044 | 480-706-7234