Apr
05

New Government Program Might Help Curb Foreclosures

April 05, 2010

A new federal program being launched today might not allow homeowners to save their homes but can assist in saving their credit scores.

The Home Affordable Foreclosure Alternative program, or HAFA, could help some homeowners who can’t afford their mortgage payments get out of their dire situations and move into more affordable housing.

The program, part of the Home Affordable Modification Program, or HAMP, encourages short sales, in which owners can sell a home and cover the mortgage, even if the sale price is less than the loan amount. It also offers as an alternative to foreclosure a deed-in-lieu, or DIL, which allows a homeowner to give up the property to satisfy the mortgage, even if the home is worth less than the loan amount.

There are also financial incentives to the program, including $1,500 to homeowners for relocation expenses at closing. The money must be reported as income to the IRS.

HAFA is available to homeowners who are delinquent in paying their mortgage. There are a lot of rules and it doesn’t apply to all loans, including Fannie Mae or Freddie Mac, the two government-run mortgage houses that are expected to release their own set of guidelines soon.

The program begins April 5, 2010, and a homeowner must sign a Short Sale or DIL Agreement by December 31, 2012 to qualify.

Though a short sale or DIL will still affect a person’s credit rating, these options are considered better alternatives than foreclosing on a home.

Do you qualify? First, you must apply for a loan modification through HAMP. Owners found ineligible for that program qualify for HAFA.

Call (888) 995-4673 to speak to a government-certified mortgage counselor for more information.

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Tracey

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