The U.S. Dept. of the Treasury last week announced the Home Affordable Foreclosure Alternatives Program (HAFA), which provides financial incentives to servicers, borrowers, and investors for a closed short sale or a deed-in-lieu (DIL).

The HAFA program simplifies and encourages short sale and DIL options by:

• Allowing pre-approved short sale terms before a property is listed;
• Preventing servicers from attempting to reduce real estate commissions established in the listing agreement as a condition for short sale approval; and
• Releasing borrowers from future liability for the debt.

Borrowers not eligible for the Home Affordable Mortgage Program must be considered for HAFA within 30 calendar days of the date the borrower does not qualify for a HAMP Trial Period Plan; does not successfully complete a HAMP Trial Period Plan; is delinquent on a HAMP modification by missing at least two consecutive payments; or requests a short sale or DIL.