The Home Affordable Foreclosure Alternative (HAFA), which is effective April 5, 2010, is designed for homeowners who have applied for aassistance through the Home Affordable Modification Program (HAMP) but have had no success with their loan modification or refinance. To participate in HAFA, homwowners must still meet HAMP's eligibility criteria as outlined above.

First, HAFA is voluntary. However, lenders who receive Federal government funding (TARP money) are being strongly "encouraged" to participate. Yet, even those lenders are allowed to interpret the HAFA guidelines "in accordance with best business practices".

Until after April 5, 2010, it's not possible to say with certainty how well the HAFA will be implemented. Its intended highlights are:

1. Homeowner has 14 days to request HAFA assistance after being denied under HAMP
2. Lender has 14 days to accept the homeowner into the HAFA program. (If denied, the homeowner can pursue a short sale under "normal" short sale procedures)
3. Lender establishes the list price
4. Homeowner must work with a real estate agent and is allowed 120 days to obtain an offer
5. When an offer is submitted, the lender has 10 days to accept or reject the offer
6. When the transaction closes:
   1. the lender will receive $1,000 from the Federal Government
   2. the homeowner will receive $1,500 from the Federal Government
   3. the first lien holder agrees NOT to pursue collection of any shortage
   4. the second lien holder MAY agree not to pursue collection of any shortage

For more information and complete set of instructions, including the required forms, may be dowloaded by clicking here --> https://www.hmpadmin.com/portal/docs/hamp_servicer/sd0909.pdf