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Archive for February, 2010

Avoiding Foreclosure

The Treasury Department has released guidelines and forms for its new Home Affordable Foreclosure Alternatives Program (HAFA), which will help homeowners who are unable to retain their home under the Home Affordable Modification Program (HAMP). Under the new HAFA program, a borrower (the current owner) may be able to avoid foreclosure by completing a short sale or a deed-in-lieu of foreclosure (DIL).

The new HAMP program provides some new very important guidelines to assist Borrowers avoid the devastating consequences of a Foreclosure. Some of the important aspects of the program are noted below.

• Use borrower financial and hardship information already collected in connection with consideration of a loan modification under HAMP. Use standard processes, documents, and timeframes/deadlines. This will dramatically decrease the amount of time it currently takes to Approve a Short Sale                                                                           
• Allow borrowers to receive pre-approved short sales terms before listing the property (including the minimum acceptable net proceeds).

• Require borrowers to be fully released from future liability for the first mortgage debt and if the subordinate lien holder receives an incentive under HAFA, that debt as well (no cash contribution, promissory note, or deficiency judgment is allowed). Being fully released from future Liability from the mortgage debt is Huge.
• Provide financial incentives: $1,500 for borrower relocation assistance; $1,000 for servicers to cover administrative and processing costs; and up to $1,000 match for investors for allowing a total of up to $3,000 in short sale proceeds to be distributed to subordinate lien holders (on a one-for-three matching basis; up to 3% of the unpaid principal balance of each subordinate loan).

Click Here  to read the complete article written by Jeff Lischer for RISMedia.

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