The Home Affordable Foreclosure Alternatives (HAFA) program was created by the U.S. Treasury as part of the Making Home Affordable (MHA) initiative in response to the 2008 housing crisis. Active from 2010 until its expiration on December 31, 2016, HAFA provided homeowners unable to sustain their mortgage payments or qualify for loan modifications a structured alternative to foreclosure.
HAFA offered two principal solutions: a short sale or a deed-in-lieu of foreclosure (DIL). Both options aimed to minimize damage to homeowners’ credit and provide a more predictable, faster exit from homeownership than traditional foreclosure.
Under the HAFA short sale option, homeowners could sell their homes for less than what they owed, with lenders pre-approving sale terms to speed up the process. Importantly, lenders were required to waive any deficiency balance — the remaining debt after the sale — protecting homeowners from future collection actions.
If a short sale was not feasible, the DIL option allowed homeowners to voluntarily transfer ownership back to the lender, eliminating remaining mortgage obligations while often qualifying for relocation assistance of up to $10,000.
HAFA’s structured timeline and clear guidelines reduced the uncertainty and stress commonly associated with selling distressed properties, improving outcomes for both homeowners and lenders. The program’s deficiency waiver provision was significant, as it forgave remaining mortgage debt, offering homeowners a fresh financial start.
Although HAFA ended in 2016, many of its features continue in current mortgage loss mitigation practices by lenders, Fannie Mae, and Freddie Mac. Borrowers facing hardship today can explore similar foreclosure alternatives, including short sales and deeds-in-lieu, often with benefits inspired by HAFA’s framework.
For homeowners struggling with mortgage payments now, it is advisable to contact their mortgage servicer or connect with a HUD-approved housing counselor to understand available foreclosure avoidance options.
FAQ
What was the difference between HAMP and HAFA?
HAMP focused on loan modifications to keep homeowners in their homes, while HAFA provided options to exit homeownership gracefully via short sales or deeds-in-lieu when modifications were not feasible.
Did HAFA require lenders to forgive remaining debt?
Yes, HAFA mandated lenders waive deficiency balances after a short sale or deed-in-lieu, preventing further debt collection.
Is HAFA still available?
No, the program expired at the end of 2016, but similar foreclosure alternatives remain accessible through lenders and government-sponsored entities.
Sources
- Making Home Affordable Program – U.S. Department of the Treasury
- Home Affordable Foreclosure Alternatives (HAFA) Program – Investopedia
- Deed in Lieu of Foreclosure – Consumer Financial Protection Bureau
For more information on related mortgage assistance options, visit our Mortgage Assistance Programs guide.