Realtor Leni Encarnacion is at the center of the housing crisis. As it became difficult to sell homes, she had difficulty with her own home payments. She was able to shave $500 off of her $6,000 a month mortgage, but she says, “we still couldn’t afford it.”

Encarnacion decided on an option that many struggling homeowners have done—a short sale. Her home, once valued at $1.2 million has been on short sale for less than $900,000. After 4 months on the market, she nearly sold her home last month, but negotiations between lenders and investors failed.

Because of failed short sales like Encarnacion’s, the government is launching the Home Affordable Foreclosure Alternative program, or HAFA, on April 5th. Under HAFA, sellers get $1,500 in moving expenses and lenders get $1,000 for approving the short sale.

To qualify for the program, homeowners must have bought their property before 2009, owe less than $700,000 mortgage payments are more than 31% of their income, and must list their property with a broker.

The program is meant to give relief to homeowners who can’t get a modification, or still struggle despite a modification. Encarnacion says short sales leave struggling home owners in better financial shape than a foreclosure.

“The ding on your credit is maybe 50-100 points where as you foreclose, it stays with you and the ding is like 200 points on your credit score, so it’s more difficult to get a mortgage in 7 years,” Encarnacion explains.

For now, Wachovia is the only bank that offers a short sale incentive. The company gives between $2,500 and $5,000 to homeowners. Encarnacion says in some cases the sellers won’t get the cash because it goes to pay other costs associated with the house.

The short sale program will last until the end of 2012. For now, Encarnacion’s home is still on sale. She says the program would not help her since her loan is more than $700,000, but she hopes the HAFA program can help her clients. Balitang America