offers homeowners, their mortgage servicers, and investors an incentive for completing a short sale or deed-in-lieu of foreclosure. With these options, under HAFA, a homeowner leaves their home to transition to more affordable housing and alleviate the mortgage debt they owe.
These options are available for homeowners who:
1.Do not qualify for a trial mortgage modification under the Making Home Affordable Program.
2.Do not successfully complete the trial period for their modification.
3.Miss at least two consecutive payments during their modification period.
4.Request a short sale or deed-in-lieu of foreclosure.
The HAFA Program streamlines both of these options to make them easier for a homeowner to work with their servicer. Under the program, a homeowner may qualify to receive $3,000 from a HAFA short sale to help with relocation costs.
Mortgage servicers and investors write their own guidelines under the Federal requirements to determine how to implement the program into their business models. For more information about your options, Jennifer and I will contact your mortgage servicer with you. As Advanced CDPE Short Sale Agents, Jennifer and I can navigate you through HAMP, HAFA, traditional loan modifications and short sales.
Nine options when facing Foreclosure
1. Do Nothing- If a homeowner does nothing, they will lose their home at foreclosure auction. Loan applications generally ask if the applicant has ever been foreclosed upon. Credit reports also disclose this damaging information. Not the best option.
2. Payoff/Refinance- Completely paying off the entire loan amount plus any default amount and fees. Usually this is accomplished through a refinance of the debt. New debt is at a normally higher interest rate and there may be a prepayment penalty because of the recent default. With this option, there should be equity in the home. This option may change your non-recourse loan to a recourse loan, enabling the lender to pursue a deficiency judgment should you redefault.
3. Reinstatement- Paying the entire default amount plus interest, attorney fees, late fees, taxes, missed payments and fees.
4. Loan Modification- Utilizing the existing mortgage company to refinance the debt or extend the terms of the loan. This may allow the homeowner to catch up at a more affordable level. To qualify, you must prove to the lender you have fixed the problem that caused the late payment.
5. Forbearance- Lender may be able to arrange a repayment plan based on the homeowner's financial situation. The lender may even be able to provide a temporary payment reduction or suspension of payments. Information will be required from the lender to show that you are able to meet the new payment plan requirements.
6. Rent the Property- A homeowner who has a mortgage payment low enough that market rent will allow it to be paid, is able to convert their property to a rental and use the rental income to pay the mortgage.
- Benefit: Allows homeowner to keep property indefinitely.
- Drawback: The issues that can arise with a rental property are many, and rent often does not cover the full cost of property ownership and maintenanc
7. Deed in Lieu of Foreclosure- Give the property back to the bank instead of the bank foreclosing. Banks generally require the home be well maintained, all mortgage payment and taxes must be current. Most loan applications ask if this has ever happened.
8. Bankruptcy- This option can liquidate debt and/or allow more time. I can refer you to a qualified bankruptcy attorney.
- Chapter 7 (Liquidation) To completely settle personal debt.
- Chapter 13(Wage Earner Plan) Payments are made toward a plan to pay off debts in 3-5 years.
- Chapter 11(Business Reorganization) A business debt solution.
9. Sale- If the property has equity (money left over after all loans and monetary encumbrances are paid). The homeowner may sell the home without lender approval through a conventional equity home sale. In this case, the homeowner will get cash from the sale. On the other hand, a Short Sale, also known as a pre-foreclosure sale, can be negotiated with your lender by your Realtor if you owe MORE than the property's value.
While it may not seem like it now, there will come a time when you look back on this situation and know that you did everything you could.
Tiffany is now offering complimentary, confidential consultations in an effort to explain your options and help you decide on the course of action thats best for your family. The idea of losing a home can be emotionally overwhelming, and we feel it is vital for you to have all the facts necessary to make an informed decision.