What is the Making
In early 2009, Treasury launched the Making Home Affordable®Program (MHA) to help struggling homeowners avoid foreclosure. MHA is only one
part of the Obama Administration's broader efforts to strengthen the housing market.
Under this program were various programs to help struggling homeowners to:
1) Keep their home by lowering their monthly mortgage payment via HAMP;
2) Refinance their loan to a lower interest rate via HARP;
3) Do a Deed in Lieu of Foreclosure; or
4) Do a Short Sale with relocation assistance via HAFA.
This program has been extended twice already and was
scheduled to have expired last December 31, 2016, and now is finally marked to
expire on September 30, 2017.
Modification Program (HAMP)
A loan modification program introduced in 2009 to promote
stability in the housing market. The Home Affordable Modification Program
(HAMP) was aimed at helping homeowners who were devoting more than 31% of their
gross income toward mortgage payments.
What is a HARP
The Home Affordable Refinance Program ®, also known as HARP
®, is a federal program of the United States, set up by the Federal Housing
Finance Agency in March 2009 to help underwater and near-underwater homeowners
refinance their mortgages.
Foreclosure Alternative (HAFA)
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. Now that we are going to lose
the HAMP and HAFA programs come September 30, 2017, an increased number of
banks and lenders have developed loss mitigation programs designed to achieve
the same objectives.
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. Now that the number of struggling homeowners
has decreased, there tend to be less competition for assistance.
Keep Your Home California Program
This is a free service for homeowners in California who have suffered a financial hardship, to help them stay in their homes, maintain an affordable mortgage payment and avoid foreclosure.
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!
What is a Short Sale?
The term “short sale” refers to a home or other property
that is going to be sold for a price that’s less than what’s currently owed to
the lender. Therefore, the sale comes up “short” on covering the total amount
due to the lender, which is how the transaction came to become known as a short
A short sale typically involves a distressed property — a
home or other property where the owner can no longer afford to pay the mortgage
payments. As a result, they may be facing imminent foreclosure and loss of the
The bank or other lender must approve a short sale offer
before the sale is permitted to proceed. Generally, the soon-to-be-former
property owner is released from further obligation to the lender once the short
sale is approved, although this is not always the case. There are a small
number of cases where the borrower may be required to repay a portion of the
balance. But this freedom from financial obligation is the primary benefit of a
short sale; it allows the borrower to move on – something that could not be
achieved in the foreseeable future in cases where the individual owes
significantly more than what the home is valued at. This option buys the seller more time to stay in the house since it takes 60-120 days and sometimes more before the entire process is closed.
Notably, there are some financial incentives available to
property owners who opt for a short sale. In addition, a short sale seller sees
less damage to their credit history instead of a foreclosure, in addition to other legal and tax consequences that could be eliminated.
If you are a distressed homeowner, please consult with a lawyer and tax consultant. If you don't have one, we have a list of professionals that you can consult for free.
For more information on how a short sale can help you, please
call Linda Rozales at (714) 329-8826.