The Home Affordable Foreclosure Alternatives (HAFA) Program is a federal program to help distressed homeowners retain their homes. Payments received under the program usually are not taxable. They are treated as payments on the mortgage loans by the government on behalf of borrowers and are excludable from gross income under the general welfare doctrine.
The tax on the investment income in excess of $1,700 (may change after 2007) of a child under age 18, based on the parents’ marginal tax rate and computed on Form 8615.