Loan Modification (HAMP) program didn’t work for you? Perhaps the new HAFA program will.

What is HAFA?  It stands for Home Affordable Foreclosure Alternatives.  It became effective April 5, 2010.

What is the purpose of HAFA?  It's to offer other alternatives to foreclosure if the homeowner fails to qualify for, is not accepted into or defaults once they are in the HAMP program.  The two additional options are that of a Short Sale (SS) or Deed-in-Lieu of Foreclosure (DIL).  These two options have been standardized and streamlined, so homes won't sit empty for long periods of time, which will help preserve the condition and the value of the property.    

What is a Short Sale?  It is when an agreement is made between a homeowner, who can no longer afford to make their monthly mortgage payments, and the mortgage company(ies), to sell the home to a qualified buyer for a purchase price that is less than the amount  of the balance of the current owner's mortgage(s). 

What is a Deed-in-Lieu (DIL)?  The circumstances are the same as in a Short Sale (SS), but instead of going through a formal sale of the property to a new buyer, the current owner merely signs over the ownership of the property to the mortgage company. 

The investor, who backed the loan, not to be confused with the servicer of the loan, who is the institution whom you are making your monthly house payment to, usually requires that a homeowner  must first try to sell their property through a SS before accepting a DIL.  But depending on the circumstances, they will make exceptions. 

Homeowner's eligibility for the HAMP program is usually considered first before they are encouraged to apply for the HAFA program.  But a homeowner is not required to first apply for HAMP. 

If the homeowner does not qualify for HAMP's loan modification trial period, does not complete the trial period successfully, becomes 2 months delinquent on their monthly payments while participating in the loan modification program or requests a SS or DIL, the homeowner will be considered for the HAFA program.

To see if this program can be of assistance to you, contact your customer service dept. at your mortgage company or speak with a real estate professional.