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The Short Sale Boom Continues: Treasury Considering Changes to Boost HAFA Short Sales

Seattle Short Sales - Tuesday, July 05, 2011

As reported in the HousingWire today, the US Treasury Department is considering further changes to the Home Affordable Foreclosure Alternatives Program (HAFA) aimed at making the program more accessible and boosting both short sales and deeds-in-lieu of foreclosure.

HAFA launched in April, 2009, as a complementary program to HAMP (Home Affordable Modification Program, which was oriented toward loan modifications). HAFA has been modified several times in order to make it more accessible, most recently this past February (see our updates here and here). It appears that these further changes will make HAFA, and therefore short sales, even more accessible to distressed homeowners.

HAMP, in contrast, has been deemed by many as a failure - and recent stats show that loan-mods processed outside of HAMP also have a high rate of re-default, within 12 months. By then, homeowners who have attempted loan modifications may be too far in debt to be considered for programs such as HAFA or other short sale prgrams: they may be stuck with foreclosure.

Meanwhile, as the number of homeowners entering loan-mod programs declines, short sales are growing. The number of short sales processed doubled from 2009 to 2010, and figures for 2011 so far suggest that this year will be even stronger.

With Treasury considering changes to make HAFA more accessible, this is good news for distressed homeowners. Short sales may help many of the homeowners whose loan modification applications were either denied or cancelled, as well as those who are currently struggling to keep up with their monthly payments and worried about foreclosure.

Click here to download our free guide to US government short sale programs, including HAFA.

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