First step in streamlining short sale or a deed-in-lieu (DIL) to avoid foreclosure!

Treasury Department Announces Home Affordable Foreclosure Alternatives Program

On November 30, 2009, the Treasury Department released guidelines and forms for its new Home Affordable Foreclosure Alternatives Program (HAFA). HAFA is part of the Home Affordable Modification Program (HAMP). HAFA provides incentives in connection with a short sale or a deed-in-lieu (DIL) of foreclosure used to avoid foreclosure on a loan eligible for modification under the HAMP program. HAFA applies to loans not owned or guaranteed by Fannie Mae or Freddie Mac, which will issue their own versions of HAFA in coming weeks. HAFA is a complex program, with 43 pages of guidelines and forms, designed to simplify and streamline use of short sales and DIL of foreclosure.

 HAFA:

  • Complements 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 in connection with consideration of a loan modification.
  • Allows borrowers to receive preapproved short sales terms before listing the property (including the minimum acceptable net proceeds).
  • Prohibits the servicers from requiring a reduction in the real estate commission agreed upon in the listing agreement (up to 6%).
  • 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 financial incentives: $1,500 for borrower relocation assistance; $1,000 for servicers to cover administrative and processing costs and up to $1,000 for investors for allowing a total of up to $3,000 in short sale proceeds to be distributed to subordinate lien holders (on a one-for-three matching basis).

The program does not take effect until April 5, 2010, but servicers may implement it before then if they meet certain requirements. The program sunsets on December 31, 2012.

Press Release, HAMP Update—New Program Offers Borrowers Foreclosure Alternatives https://www.hmpadmin.com/portal/docs/news/hampupdate113009.pdf

Supplemental Directive 09-09, Introduction of Home Affordable Foreclosure Alternatives—Short Sale and Deed-in-Lieu of Foreclosure

https://www.hmpadmin.com/portal/docs/hamp_servicer/sd0909.pdf

Post By Audeliz Angie Perez (160 Posts)

Angie Perez is a NJ Circle of Excellence award winning real estate agent for Weichert, Realtors in Edison. She sells anywhere from 12-25 houses per year on a consistent basis since 2005. Ms. Perez is primarily a buyer's agent on 60% of her real estate sales where she represents rental income investors, first time home buyers & trade up home buyers of 1-4 family homes within specific towns encompassing 4 NJ counties: Union, Essex, Middlesex and Somerset County. Many of Ms. Perez's clients appreciate her ability to negotiate favorable real estate deals for them. Many of her clients commented that her research abilities, her honesty, her knowledge of local market trends and her proficiency to manage multiple real estate transactions from start to close are some of the reasons why she was hired as their agent of choice. Please call, text or email Angie Perez to ask if she lists or sell in your town. If she can not help you, Ms. Perez would be more than happy to help or refer you to someone who can.

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2 Responses to New Program Offers Borrowers Foreclosure Alternatives

  1. I am surprised to learn that there are mixed reactions to the New Foreclosure Alternatives. In the National Association of Realtors Group on LinkedIn, a protected group only allowing registered NAR members, some of the comments are making me think twice about whether or not these foreclosure alternatives are indeed good alternatives. We are going to look closely at the comments and see which one helps to shed light on this topic. TO BE CONTINUED….

  2. I am surprised to learn that there are mixed reactions to the New Foreclosure Alternatives. In the National Association of Realtors Group on LinkedIn, a protected group only allowing registered NAR members, some of the comments are making me think twice about whether or not these foreclosure alternatives are indeed good alternatives. We are going to look closely at the comments and see which one helps to shed light on this topic. TO BE CONTINUED….

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