It’s been a little while since I’ve done a comprehensive overview of the short sale process, and certain federal legislation and lending policies have changed the landscape some. With that in mind, I’ll fully review the newest short sale strategy, HAFA. By now, I’m sure you know that HAFA stands for “Home Affordable Foreclosure Alternatives”. HAFA is Part II of the government’s failed HAMP loan modification program. I’m sure you’ve read all over the media that the individual homeowner has about a 17% chance of actually getting a loan modification. Also remember that included in that 17% figure are quite a few homeowners whose loans were indeed successfully modified, but to a HIGHER PAYMENT. How’s that “success” working for ya?
What happens (or will happen once the bungled foreclosure legal process is ironed out) to the other 83% whose loan modifications are denied? If they don’t know their options, and they don’t contact their lenders to find out their options, they’ll be foreclosed upon and evicted. Happens hundreds of times a day. Unfortunately, my company evicts people also. It’s not a pleasant task.
If (when) your loan modification fails, you need to know your options. Approximately 87% of all financial institutions are “signatories” to the Treasury Department’s foreclosure mitigation programs. As such, they are legally required to follow the guidelines that Treasury publishes for these programs. You simply need to know that they exist, and demand access.
One trick that loan servicers will use is to put homeowners in “a” loan mod program, but not “the” federal government’s program. This way, they can play by their own rules. In the same way, many homeowners will ask their lender for a HAFA short sale, and will be offered something else instead. Whether you’re asking for a HAMP loan mod, or a HAFA Short Sale, you’ll need to use the correct form for application. Use these resources to make sure you get into the right program, that offers the most incentives and homeowner protections.
Allen D. Butler, GRI, CDPE, MSSC, A-REO
As always, we love to take your calls and emails with questions about foreclosure, cash for keys, short sales, loan modifications, and deeds in lieu of foreclosure. Consultations and default services are offered at no cost to our homeowner clients. Seriously.
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*Disclaimer: We DO provide loan counseling services and process short sales for our clients, but we DO NOT charge fees. Please also remember: I am NOT an attorney, and neither do I play one on TV or the Internet. None of my opinions should be construed as specific legal advice. If you need specific legal advice regarding your personal situation, please ask.