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  • Home Affordable Foreclosure Alternatives

    Home Affordable Foreclosure Alternatives Program (HAFA)

    With a regular short sale, the homeowner is responsible for the balance remaining on the home, or rather the difference between the amount owing on the mortgage and whatever the home sold for at the short sale. With a HAFA short sale, the homeowner is released from the mortgage after selling the home. What this means to the homeowner is that they are no longer responsible for the difference between the mortgage balance and the sale price of the home. The balance is waived by the lender. However, in a HAFA short sale, the lender works with the homeowner to come up with a suitable sale price, which means there is a chance that the home may not sell for the agreed upon value, at which point the homeowner can look towards a deed-in-lieu.

    Other benefits of the HAFA Program

    Working with the HAFA program will result in a less negative effect on the homeowners credit score than traditional foreclosures or short sales.

    Also called the Exit Gracefully program, this program provides assistance to those for whom home ownership can no longer be an option. The program is designed to allow the home owner to exit the loan agreement, avoid a foreclosure and receive $3,000 towards relocation, giving the homeowner the relief from an unbearable financial burden and providing the basics of a fresh start. Successful applicants will not see an impact on their credit report that often comes with a foreclosure.

    And, when the deal is closed, the HAFA fund will provide $3,000 in relocation assistance to help the homeowner transition out of the current property ad into the new one.


    The basic qualifications are very much like the other programs;

    Applicants can qualify for this route if they did not qualify or complete the HAMP Trial Period or if the homeowner could not sell their home after 120 days on the market. There must not be any other liens on the property, there must be documented proof of a financial hardship or if the home loan payments are more than 31 percent of the home’s value.

    More on a Short Sale

    A Short Sale is when a lender agrees that the sale of the home, even though the home is now worth less than the amount owing on the mortgage, is an acceptable way out of the home loan, and the home owner has exhausted all resources including the HAMP program and all other available applicable avenues. Mike Kelly shares with us what the differences are between a Short Sale and a Foreclosure.

    Deed In Lieu

    This is a process by which the homeowner simply signs over the title of the home to the lender and the lender cancels the mortgage. This can be an acceptable way through the situation should the lender not wish to short sell the home and lose the asset altogether, or if the homeowner has exceeded all other options or does not qualify for other options, or can not sell the home or through a hardship is not able to adequately aportion the time and effort required to work on the situation.

    There may be problems if the home has any additional claims and liens against it, second mortgage through another lender, or if other lenders who backed the mortgage would rather short sell the home. The applicant can also qualify for the Deed In Lieu If the homeowner has recently filed for bankruptcy.

    It is important to note that most of the options available for foreclosure also come with a detrimental effect to the homeowner’s credit rating. It is advisable to check with a home loan modification lawyer to see if you qualify and how your choices will effect your credit.

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