On the 25th of March 2010, the Obama administration extended the Affordable Housing (MHA) program to include aid for homeowners who are both unemployed and under water on their mortgages. More incentives will be offered to lenders to help these homeowners avoid foreclosure.

A forbearance for a period of three to six months will allow the debtor time to obtain permanent employment, or if eligible borrowers can prove they are eligible for unemployment benefits they then can reduce their mortgage payments. If the debtor is unable to find permanent employment during the period of forebearance, he or she will be considered for a loan modification or permanent HAMP loan modification or HAFA (Home Affordable Foreclosure Alternatives) option to avoid foreclosure.

The lenders will postpone the foreclosure after the borrower is accepted into the HAMP program for a trial modification and until the borrowers problem is solved, or the borrower ceases to be eligible for all HAMP or HAFA programs.

However, if you are unable to receive a HAMP modification, there are options available through the program HAFA.

Participation in HAFA may not save the homeowner the loss of their property, but it can eliminate the effects of the foreclosure. Financial incentives for participants in the program include servicing bonus of $ 1,000 for lenders and $ 1,500 relocation bonus for the homeowners to move.

HAFA is designed for homeowners who have requested HAMP assistance, but did not have success with their loan modification program. To participate in HAFA, owners must still meet the HAMP, the eligibility criteria (primary residents, first-lien mortgages, serious delinquency, unpaid balance of $ 729,750 and the mortgage of more than 31 per cent of gross income).

Owners must be considered for HAFA within 30 days if they cannot meet the HAMP requirements. However, the homeowner has only 14 days to respond to the written notice. HAFA may be available to them, giving creditor time to respond to their 30 day deadline.

As with any short sale and deeds in lieu, the lender or loan servicer of the primary mortgage must approve the transaction and make their own independent appraisal. HAFA also must accept the proceeds of the sale of the house as full payment and shall waive the remainding balance of the loan of the house.

HAFA’s Short Sale Agreement (SSA) has a certain provisions for all parties concerned. Their SSA requires that the deadline for the homeowner to find a buyer and close the transaction must not be less than 120 calendar days from the date the SSA is sent homeowner. The creditor has the option to extend this period of another 245 days for a total period of 12 months. SSA also requires the HAFA transaction must be an Arms length agreement, and the final purchaser must agree to hold property for at least 90 days after closing. Finally, SSA gives the listing real estate agent the right to an undiscounted commission of 6 percent.

The HAFA program should begin April 5, 2010. Servicers can initiate a HAFA transaction early as 2010, under certain conditions. To date, all Hafa agreements must be finished and signed by December 31, 2012.

PLEASE CONTACT US TO SEE IF YOU ARE ELIGIBLE FOR EITHER HAMP OR HAFA!