Here are the highlights of Obama's latest Home Affordable program, HAFA (Home Affordable Foreclosure Alternatives):
The Obama Administration created the HAFA program for loans that otherwise meet the criteria for HAMP (Home Affordable Modification Program) but were unable to be modifiied under the HAMP guidelines because they are not securitized by Fannie or Freddie, thus have their own short sale and deed-in-lieu programs. Hmmm... so most of the borrowers/loans that need the modifications - Subprime, Alt-A, liberal loan programs weren't eligible! Brilliant.
I digress...
Servicers are not obligated to participate in HAFA, so you need to find out if your servicer is participating. If they are, they are supposed to notify the borrower of the availability of a short sale or deed-in-lieu and give them 14 days to decide.
The list goes on and on, but here are the main points of the program:
- The borrower gets $3,000 at closing - nice!
- The bank/servicer gets $1,500 at closing - nice!
- The 2nd lien holder gets 6% or $6,000 (whichever is greater) at closing - it's something!
- 2nd lien holder cannot file a deficiency judgment against or require a promissory note from the borrower - biggie
- Applies to Owner Occupied properties only (no 2nd homes, no investment properties) - not good
- Loan must have been originated prior to 1/1/09
- Loan must be 61+ days delinquent - dumb move, should be proactive and work with borrowers before they're delinquent
- The borrower has 14 days to get their documentation to the bank/servicer or they forfeit the program
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