Submitted by admin on Thu, 04/15/2010 - 22:23
With the introduction of the Home Affordable Foreclosure Alternatives Program (HAFA) on April 5th, new rules and guidelines have come up for the lenders. This new program is an extension of the HAMP (Home Affordable Modification Program) and will in turn help the borrowers further in safeguarding their property against foreclosures.
Let's take a look at some of the specifics of the HAFA program:
- Hardship information - The financial hardship information provided by the borrower under HAMP will be taken into account while considering him/her for this program.
- Pre-approved short sale terms - Under this program, the borrowers will receive pre-approved short sale terms. They would receive these terms and conditions prior to their listing of the property with a real estate agent.
- Future liability - The borrowers will be released from the future liability in regards to the loan. The lender will not be able to come after the borrower for any kind of deficiency judgment or cash contribution.
- Financial incentives - The HAFA program provides financial incentives for servicers to cover administrative and processing needs. It also offers financial incentives including $3,000 for borrower relocation assistance.
- Participating servicers - All the servicers participating in HAMP to will have to implement HAFA in accordance with their own written policy. However, the guidelines should be consistent with investor guidelines
- Tenure of the program - The HAFA program comes to an end on December. 31st, 2010.
There are certain criteria for evaluating a loan to check out whether or not a borrower qualifies for it. These steps include the following:
- Property valuation.
- Title Review.
- Borrower solicitation and response.
- Assess expected recovery through foreclosure .
- Compare the expected recovery to a HAFA short sale or a deed in lieu of foreclosure.
- Use of borrower information from HAMP.
- Notice to borrowers if short sale or deed in lieu of foreclosure is not available.