There was a pretty interesting article last week in REO Insider by Jon Prior that discussed the effect that Home Affordable Foreclosures Alternatives (HAFA) program is having on the foreclosure market in California.
It seems that an increasing number of foreclosures in California are being cancelled, and the reasons for this spate of cancellations can be attributed largely to programs such as HAFA, which is intended to encourage lenders to allow short sales as opposed to foreclosures.
HAFA encourages short sales by providing cash incentives to lenders who allow short sales, especially those who hold subordinate mortgages, which can effectively cause the short sale process to grind to a halt.
According to the article, 22,000 foreclosures sales were cancelled in June in California alone. Many of these cancellations can be attributed to a rise in short sales. In southern California alone short sales are up nearly 75 percent in 2010. It appears that many lenders would prefer a short sale to a foreclosure, especially once the HAFA incentives are taken into consideration.
It remains to be seen whether this trend will continue, or if this is some sort of temporary aberration, but this could be evidence that the HAFA program is having a net positive effect in some places, which is more than we can say for other foreclosure prevention initiatives.
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Short Sale Artisan
August 5, 2010 @ 5:03 pm
Forgive my skepticism but HousingWire isn’t always the most unbiased. Everything I have heard / read is that HAFA has been underwhelming, to say the least.
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