A new government program will essentially pay homeowners to sell at a loss. It’s called HAFA, or Home Affordable Foreclosure Alternatives and it goes into effect April 5. The goal is to help some of the nearly 25% of US homeowners who currently owe more on their homes than what they’re worth. Under HAFA, homeowners could sell their homes for less than they owe and lenders would get an incentive for allowing that short sale.
Wondering if you qualify for HAFA? Those who are eligible must meet these requirements:
- They didn’t qualify for loan modifications under the already-exisiting Home Affordable Modification Program (often because they lacked the income.)
- May have received a trial loan modification under HAMP but not a permanent one.
- Be at least two consecutive payments behind on their modified loans.
Under this program, rather than foreclosing on the property, the homeowner would try to sell it for less than the mortgage amount. That lower amount is set by an appraisal from an independent real estate agent– not by the homeowner. The homeowner gives back the home and title to the loan servicer. The government would then provide incentives for the parties involved. The homeowner would receive $1500 for relocation assistance. Then the holder of the primary mortgage and the secondary mortgage (if there is one) would each receive $1000. Short sales are also much cheaper for lenders who have to fork over as much as $40,000 per foreclosure. For more information on Home Affordable Foreclosure Alternatives, visit MakingHomeAffordable.gov.
Photo courtesy of respres
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