Not being able to afford your mortgage anymore can be a stressful experience. Knowing that you will eventually have to abandon your home and move again is not pleasant, especially knowing a foreclosure will leave a large black spot on your credit report. Fortunately, the Home Affordable Foreclosure Alternatives (HAFA) program offers home owners who are facing imminent foreclosure two options, which can make this experience more bearable. HAFA helps home owners who are eligible by providing protection and money if they decide to do a short sale or Deed-in-Lieu of foreclosure.
The Home Affordable Foreclosure Alternatives program is designed to help borrowers and their lenders to work together to avoid foreclosure. Lenders, like home owners, want to avoid foreclosure, because it’s a long and expensive process. The alternatives to foreclosure that HAFA offers are much more attractive for both parties involved.
Benefits of Home Affordable Foreclosure Alternatives
The HAFA program gives home owners the chance to avoid foreclosure by performing a short sale, which means selling the home for less than you owe to your lender, or giving the home back to your lender, known as a Deed-in-Lieu of foreclosure. Here are the most important benefits that this program offers:
- After completing a short sale through HAFA, you will be free from your mortgage debt, unlike when you perform a regular short sale. The difference between what you owe and what your home sold for will be waived.
- After closing, the Home Affordable Foreclosure Alternatives program may offer you $3,000 in relocation assistance, if you are eligible.
- You are entitled to free advice from a professional, such as a HUD-approved housing counselor or a licensed real estate agent.
- Lenders work with you to determine a good short sale price and are required to let you try to sell your home through a short sale or accept a Deed-in-Lieu of foreclosure before foreclosing on your property.
- When using the HAFA program, your credit score won’t take as big of a hit as it would if you did a conventional short sale.
HAFA Eligibility Requirements
The first step to qualifying for the Home Affordable Foreclosure Alternatives Program is to apply to HAMP, Home Affordable Modification Program. In order to qualify for the HAMP program, you will have to meet the following criteria:
- The home must be your primary residence.
- Your mortgage must have originated before January 1, 2009.
- The mortgage loan amount must be less than $729,750.
- Your monthly mortgage payment must exceed 31 percent of your gross income.
If you don’t meet the qualification criteria for HAMP, then your best choice is finding a short sale agent to assist you. If you are eligible for HAMP, it doesn’t guarantee that you will qualify. However, if you want to do a short sale, then being eligible but not qualifying is good news. If you are eligible, but the Home Affordable Modification Program turns you down, then you can qualify for HAFA. You can also get accepted into HAMP, but stop making mortgage loan modification payments in order to be able to apply for HAFA.
You can find out if you qualify for the Home Affordable Foreclosure Alternatives program by simply speaking to your lender. Foreclosure is hard on your lender as well, so they will try to avoid it and give you other options. Fortunately, the government is also willing to help through programs like HAFA, which are designed to help you get through a difficult period of your life much easier.