HAMP and HAFA

Struggling homeowners are beginning to see some new programs rolled out that may help them avoid foreclosure.  Foreclosure is the last and worst option for both the homeowner and for all of us in the neighborhood.  The homeowner gets forced out of their home, their credit scores are lowered by over 200 points which will leave them in a tough spot getting any kind of loan for the next 5 years.  The neighborhood suffers because the homes are often neglected in the lengthy time between the old owners leaving and the new owners completing the purpose.  The neighborhood values are negatively impacted as the home will be sold for significantly less than comparable sales that are not distressed.  For all of these reasons and more it will benefit the entire neighborhood if a better solution can be found.

HAMP (Home Affordable Modification Program)

This federal program is designed to assist struggling homeowners to stay in their homes by making the loan more affordable.  A loan modification can be a reduction in interest rate or a reduction in the loan balance.  Eligibility includes:

  • Primary residence
  • Balance of loan < $729,750
  • Struggling to make payments due to changed circumstance i.e. loss of job, increase in payments or large medical bills (loss of equity alone will not qualify)
  • Did you get your mortgage before 1/1/2009
  • Total housing payment exceeds 31% of gross monthly income (total housing payment includes principal, interest, taxes, insurance, HOA dues, mortgage insurance)

If you meet these qualifications you may be qualified for a loan modification.  Your loan servicer must be participating.  To see if your loan servicer is participating go to www.MakingHomeAffordable.com/contact_servicer.html

HAFA (Home Affordable Foreclosure Alternatives)

Another federal program rolling out April 5th, 2010 is designed help homeowners avoid foreclosure by securing a successful short sale.  Incentives are offered to mortgage servicers to participate.  A short sale will have much less impact on a borrowers’ credit scores than a foreclosure.  To learn more about  short sales click on the’ loan center’ above and select ‘loan modifications’

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