SEARCH

FOR BUYERS

FOR SELLERS

AUCTIONS

MORTGAGES

REALTORS

OTHER INFO

HAFA

HOME AFFORDABLE FORECLOSURE ALTERNATIVES

Many homeowners may feel that they can no longer afford their home, but want to avoid the negative effects of foreclosure. The Home Affordable Foreclosure Alternative (HAFA) program offers homeowners, their mortgage servicers, and investors an incentive for completing a short sale or deed-in-lieu of foreclosure. With these options, under HAFA, a homeowner leaves their home to transition to more affordable housing and alieviate the mortgage debt they owe.

These options are available for homeowners who:
1. Do not qualify for a trial mortgage modification under the Making Home Affordable Program
2. Do not successfully complete the trial period for their modification
3. Miss at least two consecutive payumanets during their modification period
4. Request a short sale or deed-in-lieu of foreclosure
Short Sale
In a short sale, the servicer allows the homeowner to list and sell the mortgage property with the understanding that the net proceeds from the sale may be less than the total amount due on the first mortgage.
Deed-in-Lieu of Foreclosure
Generally, if the borrower makes a good faith effor to sell the property but is not successful, a services may consider a deed-in-lieu of foreclosure. With a deed-in-lieu, the borrower voluntarily tranfer ownership of the property to the servicer – provided the title is free and clear of mortgages, liens, and encumbrances.
HAFA
• Compliments HAMP by providing a viable alternative for borrowers (the current homeowners) who are HAMP eligible but nevertheless unable to keep their home.Uses borrower financial and hardship information already collected under HAMP.

• Allows borrowers to receive pre-approved short sales terms before listing the property (including the minimum acceptable net proceeds and acceptable closing costs).

• Requires borrowers to be fully released from future liability for the first mortgage debt and, if the subordinate lien holders receives an incentive under HAFA, those debts as well (no cash contribution, promissory note, or deficiency judgment is allowed).

• Uses a standard process, uniform documents, and timeframes/deadlines.

• Provides financial incentives: $3,000 for borrower relocation assistance; $1,500 for servicers to cover administrative and processing costs; and up to a $2,000 match for investors for allowing a total of up to $6,000 in short sale proceeds to be distributed to subordinate lien holders.

• Requires all servicers participating in HAMP to implement HAFA in accordance with their own written policy, consistent with investor guidelines. The policy may include factors such as the severity of the potential loss, local markets, timing of pending foreclosure actions, and borrower motivation and cooperation.


HAMP
The Home Affordable Modification Program
(Ends in December 2012)

· Mortgage must be over 31% of borrower monthly gross income

· Must live in property (1-4 units)

· Less than $729,000 on their 1st/2nd loans okay

· Loan originated before Jan. 1st, 2009

· Current or late mortgages okay (Pending NOD "Notice of Default"/No NOS "Notice of Sale", unless 60 days or more from sale date)

Must have a financial hardship (i.e. job loss, reduced income, divorce, etc) The Home Affordable Modification Program (HAMP) will help up to 3 to 4 million at-risk homeowners avoid foreclosure by reducing monthly mortgage payments. Working with the banking and credit union regulators, the FHA, the VA, the USDA and the Federal Housing Finance Agency, the Treasury Department today announced program guidelines that are expected to become standard industry practice in pursuing affordable and sustainable mortgage modifications. This program will work in tandem with an expanded and improved Hope for Homeowners program.