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HAFA Cost Treasury $4.3 Million In November

A report by the Congressional Oversight Panel (COP) showed that the Treasury Department has poured $4.3 million into the Home Affordable Foreclosure Alternatives (HAFA) short sale program in November, just a fraction of what it has spent on its sister project, the Home Affordable Modification Program (HAMP).

COP showed that the Treasury had spent over $650 million on HAMP for payouts to lenders, and predicted that the whole program can be completed with a budget of $4 billion, rather than the $30 billion previously allotted by the Treasury.

HAFA was launched in April in an attempt to promote short sales as a last resort against foreclosure, particularly for those who have failed under HAMP. The program has so far fallen short of its goals and has repeatedly come under fire for its weak performance. COP Chairman Senator Ted Kaufman said that HAFA and similar programs have done little to solve the foreclosure crisis.

The Treasury replied by saying that the programs served as a guideline for in-house mortgage workout programs that previously weren’t offered. This was especially true, they said, for short sales, which have long troubled realtors, homeowners, and buyers.

Financial Stability Acting Assistant Secretary Tim Massad, in a conference call earlier this week, said that it naturally takes time for these programs to take off, and one can’t expect full results as soon as the announcement is made.

HAFA pays mortgage servicers up to $1,500 for each short sale and matches payouts up to $2,000 for every $6,000 of the proceeds distributed to secondary lien holders. Borrowers also get a relocation assistance credit of $3,000.

Based on these figures, the Treasury appears to have completed a mere 661 short sales under HAFA throughout the year, according to the COP report. As of September 30, according to figures from the Troubled Asset Relief Program (TARP), servicers have done only 342 short sales. No figures are available from the Treasury to back these claims, however.