The HAFA program (Home Affordable Foreclosure Alternatives) will start helping more homeowners avoid foreclosure and complete a short sale instead to take the pressure of a home they can no longer afford.

The HAFA program’s new monetary incentives to banks who participate in the program beginning April 5, 2010 should help tremendously.

According to :

Under the new Home Affordable Foreclosure Alternatives program, borrowers will earn a $3,000 “relocation incentive” and servicers will get $1,500 for handling a short sale.

The investors who actually own the mortgage notes will get $2,000 in exchange for sharing proceeds of the short sales with any second-lien holders. And, finally, those second lien holders will receive up to $6,000 for releasing their claims.

This is a big incentive when multiple banks hold liens on a property, and tend to have been the biggest issue when there is more than one bank involved. This helps the secondary lien holders recoup some loss, therefore making these properties more eligible for short sale rather than foreclosure.

The other good news is that banks who participate in the program have to know & state up front what they would be willing to take, and when bona fide offers come in, they must respond within 10 days. In the past, it could take months for an answer, so this is a huge step to make these homes much more saleable.

Here are more details from the National Association of REALTORS.

The hope is that this will help stabilize the housing market, so we see less foreclosures hurting neighborhood values.

Now, keep in mind that the Short Sale process is not a fun one, and it is a last resort. If you are facing foreclosure or the possibility of foreclosure, this is most likely the way to go. There are other options and possible modifications to your loan to help you out, if there is a possibility you can stay in your home.

Either way, a real estate professional can help guide you in the right direction. Please contact me so I can help you further and get you in touch with the right people.