December 31, 2016, marked the end of the Home Affordable Foreclosure Alternative (HAFA) program, which provided struggling homeowners with an opportunity to exit their homes in a manner that was less damaging to their credit, while also receiving relocation assistance funds. Unfortunately, that program, along with another — the Home Affordable Modification Program (HAMP) — came to a close at the end of 2016, after a one-year reprieve (they were originally slated to end on December 31, 2015). So what programs or opportunities are available to homeowners who are struggling? That’s precisely what we’ll explore in today’s article from The Short Sale Gal Kristine Zelazo.
Why Was HAFA Discontinued? What Options Exist Now?
The Home Affordable Foreclosure Alternative (HAFA) program was a unique federal assistance program that was to provide homeowners with an “opportunity to exit their homes and be relieved of their remaining mortgage debt through a short sale or a deed-in-lieu of foreclosure (DIL),” along with up to $10,000 in relocation assistance.
The HAFA program, along with HAMP, were all part of the Federal Housing Finance Agency’s (FHFA) Making Home Affordable (MHA) Programs, which were introduced in 2009 when the housing crisis was unfolding in full force. The programs were designed to provide struggling homeowners with an opportunity to lower their monthly payments either by modifying their mortgage loan or refinancing. And if remaining in the home proved to be a non-viable avenue, then the property owners could pursue the HAFA program’s offerings in an effort to avoid a deficiency judgment. Deficiency judgments can make it even more challenging for a distressed homeowner to get back on their feet after leaving their home.
A deficiency judgment is issued in cases where the home sells for an amount that’s less than the amount owed on the mortgage (the very definition of a short sale.) In normal circumstances, the lender does have the option to pursue the borrower for the remaining sum via a deficiency judgment. But HAFA program participants were essentially “immune” from deficiency judgments as part of the program.
As a short sale and distressed property specialist, one of the goals is to help homeowners to proceed in a manner that maximizes their chances for a favorable, positive resolution; one that will allow them to move forward. While it was unfortunate to lose the HAMP and HAFA programs, an increased number of banks and lenders have developed loss mitigation programs designed to achieve the same objectives.
For example, relatively few homeowners actually receive deficiency judgments; a majority are allowed to walk away from their property following a short sale. Some lenders have also established funds designed to help homeowners who need a bit of help, whether it’s with a loan modification, refinancing or even relocation. For this reason, it’s important to ask your lender to find out what offerings are available. There are also some state-specific and privately-run programs available to help distressed homeowners. Now that the number of struggling homeowners has decreased, there tends to be less competition for assistance.
Notably, the Home Affordable Refinance Program or HARP was also slated to end in December 2016, but the FHFA made the decision to continue that particular program through September 30, 2017, in order to ease the transition. Additionally, there is buzz that a new program could be launched to supplement key portions of the program offerings that were available through HARP, HAMP and HAFA. What’s more, the FHFA pointed to the massive decline in the number of people using these programs, citing the industry-wide policy change that was prompted by the housing market crash.
Are You Thinking of Relocating from Your Home?
In short, if you’re thinking about pursuing a short sale or deed-in-lieu of foreclosure, now is the time to take action!
The Short Sale Gal Kristine Zelazo may be able to assist if you’re seeking to pursue a short sale or simply need to sell your home quickly. If you’re thinking of selling, simply complete Kristine’s home sale form and she will be in touch to discuss your situation.
Based in South Florida, Kristine works with both buyers and sellers and she is an experienced negotiator. So if you’re an investor seeking to get started in buying short sales and need a great mentor or wish to pursue a short sale transaction for the sale of your property, turn to Kristine Zelazo, the Short Sale Gal!
To get started with selling your home, simply complete the home pre-sale form to provide Kristine with additional information on the property in question. Then, call 800.664.0616, x802.