In case you are not aware what a short sale is, I will give you a quick 500 foot view answer. You have sold your home at a price that does not equal the balance owed to your lender(s) and you are requesting that the lender will accept less then they are owed by you. 

The current problem with short selling is that lenders have been taking anywhere from 60 days ( a near miracle) all the way to 1 year. I personally am working still on a short sale which began the process in May 2009.  Why does the process take so long?  Millions of homeowners are trying to accomplish this and banks are overwhelmed.  So, the Treasury Dept. came up with HAFA-Home Affordable Foreclosure Alternatives Program.

In 2009, the Treasury Department introduced the HAFA program to provide a viable option for homeowners who are unable to keep their homes through the existing Home Affordable Modification Program (HAMP). The HAFA program takes effect on April 5, 2010—although some servicers may implement it sooner, if they meet certain requirement–and sunsets on December 31, 2012. http://www.realtor.org/government_affairs/short_sales_hafa

HAFA provides incentives in connection with a short sale or a deed-in-lieu of foreclosure (DIL) used to avoid foreclosure on a loan eligible for modification under the HAMP program. Servicers participating in HAMP are also required to comply with HAFA. A list of servicers participating in HAMP (including HAFA) is available at: www.makinghomeaffordable.com/contact_servicer.html.

Here are the basic provisions:

• Uses borrower financial and hardship information already collected in connection with consideration of a loan modification.
• Allows borrowers to receive pre-approved short sales terms before listing the property (including the minimum acceptable net proceeds).
• Requires borrowers to be fully released from future liability for the first mortgage debt (no cash contribution, promissory note, or deficiency judgment is allowed).
• Uses standard processes, documents, and timeframes/deadlines.
• Provides the following financial incentives:
  • $3,000 for borrower relocation assistance;
  • $1,500 for servicers to cover administrative and processing costs;
  • Up to $2,000 for investors who allow a total of up to $6,000 in short sale proceeds to be distributed to subordinate lien holders, on a one-for-three matching balance.

In my opinion, HAFA- is a great effort to try and move this stalled process along.