By At the beginning of April, the Federal Government introduced new measures aimed at helping Americans avoid foreclosure. Sort of lost in all of the news about how great the real estate market’s been doing, Home Affordable Foreclosure Alternatives (HAFA), are designed to help struggling homeowners who, regardless of effort to keep their homes, simply can’t afford to.
“A short sale would really help … if only the bank would agree.”
Now, maybe it will. Banks already participating in the Government’s HAMP program are required to participate in HAFA, as well. Mortgage holders have been notoriously difficult to deal with when it comes to short sales. One hand doesn’t know what the other is doing, approvals take virtual eternities (if they ever come at all), homeowners who’re feverishly trying to sell their homes or face the spectre of foreclosure are lost in a sea of confusion about how to proceed in the process.
With a glut of foreclosed homes (over a million at last count), banks are having to rethink their options. Each foreclosure costs banks upwards of $100,000 more than a short sale, but until now, they’ve not been enthusiastic about approving them.
The HAFA program should make things a bit easier on everyone. Whether it’ll work is another matter altogether.
The new guidelines institute a timeline, so that all parties involved will know about what they can expect and when. Sellers will be able to get pre-approval and know what the absolute bottom-line acceptable prices will be. Junior lienholders, who typically get left out in the cold and who are, typically, the factors in denying short sales, will be able to recoup some of their losses. Improvements are definitely being made to the system (although “system” is far too precise a word to pin on the old way of doing things).
A major benefit to HAFA is that it will, hopefully, allow homeowners to leave their properties with their heads held high, and with their dignity intact by fully releasing them from the liability of their loan.
In California, which has been one of the 4 states hardest hit by the foreclosure crisis, there’s a bit more to the program.
The recipients of $700 million dollars in additional aid, the State of California has proposed assistance to low-to-moderate income level homeowners through means such as principal write-downs for those who owe more on their home than it is worth (it’ll be interesting to hear reactions from people who are in the same situation but who are still making their payments on time), relocation assistance, subsidized mortgage payments, or temporary aid for the unemployed who are at risk of foreclosure.
They are, sadly, many more homeowners affected by this crisis that won’t be helped, for one reason or another, by this program or any other.
If you’re a homeowner in distress, please contact your lender. Ask your Intero real estate professional. Find out what alternatives you have before it’s too late.
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