Minnesota Short Sale Expert

The latest news in the real estate and lending industry are the two newly released federal programs called HAFA (Home Affordable Foreclosure Alternatives) and HAMP (Home Affordable Modification Program). What do they mean? Who does it help? What are the qualifications? Where do you apply?

These 2 federal programs are to assist struggling homeowners who may be at risk of foreclosure, are out of work, or have home values that are “under water” (value of home is less than current mortgage owed). Due to these factors, each homeowner’s situation is different. It is important to remember that many homeowners tried to refinance, but were unable to in the past, due to no or little equity in the home. (“LTV” or loan to value) This was caused by the crashing fall of market values throughout the country. These programs will bring many homeowners the relief they need. The lender will be given incentives by HAFA and HAMP to write down principal on these mortgages. This will help homeowner regain the equity that was previously lost.

In order to qualify, you need to speak with your current lender. Lenders are not required to participate, but many are, due to the incentives named in the programs. One main purpose of these programs is to keep people in their homes and making payments.Lenders will use a formula that will lower the monthly payment if it is 31% greater than the homeowner’s monthly gross income. This can be done permanently or on a trial basis, for instance, if homeowner lost a job. If the lender finds that even with a loan modification, the homeowner is not able to make payments work in their budget, for whatever reason, a short sale or deed in lieu of foreclosure will be offered. HAFA also can help the homeowner, despite losing their home. The homeowner is given $1500, by HAFA, to assist in moving costs. The homeowner would have less damage on credit report with a short sale versus a foreclosure.

The HAFA and HAMP programs officially begin April 5th, 2010, however, many lenders have already begun to use them. Fact sheets are available on both these programs at www.makinghomeaffordable.gov. This upcoming week will be a busy time for homeowners trying to apply for these programs. Staff has been increased to cover higher volume of program requests and hours of help have been extended.