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Struggling to Pay Your Mortgage? | RealEstateInvesting.com

April 24, 2014

Struggling to Pay Your Mortgage?

There are options out there for you that are struggling with mortgage payments.

Have you heard about HAMP and HAFA? If you are not sure what to know about either one of these then you need to read the article below.  HAFA and HAMP can help you if you are struggling to pay your mortgage.

 

When doing a short sale the normal way, you are able to release yourself from the obligation to make a monthly mortgage payment, but it can take an inordinate amount of time. Short sales are a timely process and it takes a long time to get to the closing table, however, the HAFA program is a great way to get a short sale completed faster than usual.

What Is HAFA?

It stands for Home Affordable Foreclosure Alternatives and it was designed by the government to help home sellers short sale or deed in lieu their homes back to the bank. The program was introduced on April 5th, 2010 and will continue to run through 2012 as we head into the economic recovery.

The program is voluntary and provides a few incentives for both the borrower and the lender in a short sale or deed in lieu process (where the homeowner deeds the property back to the mortgage holder).

If a lender participates in the related program HAMP, they must also use the HAFA program as stated in government regulations. There are currenyly over 100 lenders who participate in the program today.

What Is HAMP Related To HAFA?

HAMP, which stands for Home Affordable Modification Program, is a government sponsored program that aids home sellers in the loan modification process, which also runs through 2012.

The goal of HAMP is to assist millions of homeowners avoid a foreclosure which could kill the current real estate market.

HAMP lowers monthly payments for borrowers with loans less than $ 729,500 or at least 31% of a borrowers pre-tax income. In order to qualify, a borrower must prove they are unable to meet their current mortgage obligation or monthly payment. This is where HAFA comes in.

HAFA is available to all HAMP-eligible homeowners who were unable to qualify for the goverment sponsored HAMP loan modification program, were unable to complete the HAMP trial period, and who missed at least two consecutive payments making them eligible for a short sale or the deed-in-lieu program.

HAFA Help The Short Sale Process Go Faster

One of the major issues of a short sale is the long and grueling process of approving a short sale. The HAFA program was specifically built to streamline the entire process making it easier for buyers to snatch up lingering inventory.

HAFA requires lenders to pre-approve a borrower for the short sale before listing the property and they must have the sale terms set forth prior to the activation of the listing by a real estate agent.

Without HAFA, the short sale process can take many months and sometimes up to a year. The lender has to consider price, the borrowers eligibility and hardships in order to qualify for a short sale, and they have to clear a buyers offer through multiple third parties.

The bank will request a BPO as well as an appraisal, which could also push the closing date back even further. So, the HAFA program makes the process go much faster. Without the streamlined HAFA process, many buyers would just walk away leaving the seller to foreclosure, and home prices would continue to decline.

Incentives Provided

The program provides a few great incentives to both the seller and the loan serviced. First, in order to help the sellers get out of the property, HAFA will provide the seller with a $ 3,000 stipend to relocate. Second, $ 1,500 will be provided to the servicer of the loan to cover their administrative costs.

By doing this, loan servicer’s will be more inclined to cooperate. If the investor of the loan releases up to $ 6,000 in funds to junior lien holders, the program will provide them with up to $ 2,000 to cover their costs as well.

Prevents A Deficiency Judgement

Once the short sale is completed, in most cases, there is some sort of deficiency issued that the seller must pay. With the HAFA program this is not the case. A deficiency judgement is not permitted when HAFA is used saving sellers from coming up with money at closing. This is probably the most beneficial part of the program, and is the main reason I recommend it to my clients.

Article by Lisa Udy

Lisa Udy is a real estate expert in Northern Utah providing services for both buyers and sellers. To view Logan Utah short sales and Logan Utah forclosures, please visit Lisa’s real estate website at http://www.LisaUdy.com.

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