At this point, it’s hard to tell how the Home Affordable Foreclosure Alternative (HAFA) Program will affect the Tampa real estate market.

Short sales constitute a good percentage of current Tampa real estate listings. Anyone who has ever been involved in a short sale knows that the short sale request process is like entering the wild west –  the rules change day by day and you never know what to expect. There has been a public outcry for regulation in regards to short sales since the Tampa real estate market (and the rest of the country’s) bubble burst.

In response, the federal government has released the Home Affordable Foreclosure Alternative (HAFA) Program which will take effect on April 5, 2010. HAFA is different from last year’s Home Affordable Modification Program (HAMP), in that HAMP was intended to help people retain their homes, while HAFA is intended to help people short sale their homes. HAFA offers guidelines by which homeowners can sell their homes for less than what is owed on the existing mortgage(s).  The program is supposed to streamline the short sale request process by using standard processes, documents and timeframes. In order to attract participation from lenders, lending institutions are offered financial incentives to follow HAFA’s guidance and use its standard forms. Nevertheless, the program is strictly voluntary and lenders do not have to follow the US Treasury Department’s promulgated guidelines. It is important to know that HAFA is not a law.

In order to be eligible for the HAFA program, borrowers must have applied for the HAMP program and their application was either denied or they were unable to keep up on the modified mortgage. The HAFA program utilizes documents that were already collected as part of the mortgage modification program and permits homeowners to get pre-approval for short sales. This is an improvement to the standard short sale because typically, lenders will only consider a short sale request if there is a buyer for the property. The HAFA program is limited to loans that were originated prior to January 1, 2009 on the borrower’s primary residence, which do not exceed $729,750 and which causes a financial hardship because the monthly payment exceed 31% of the borrower’s gross income.

Whether this new government program will help to move short sale homes in Tampa and thereby improve the Tampa real estate market remains to be seen.

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