HAFA Program For Underwater And Unemployed Homeowners–How Do Homeowners Qualify?

Home loan assistance and foreclosure prevention opportunities for homeowners who are in an underwater situation or who may be unemployed have come through the federal home loan modification program in the majority of cases, but not all homeowners have qualified for modification assistance and have turned to foreclosure alternatives through the Home Affordable Foreclosure Alternatives Program, also known as HAFA, as a way to escape their mortgage situation without facing any formal foreclosure proceeding.

Obviously, homeowners who have been unaided by federal modification initiatives or extension programs like the Unemployment Program, have turned to these foreclosure alternatives by either seeking out a short sale or deed in lieu of foreclosure plans in the hopes of avoiding financial distress related to the loss of their home through foreclosure. Yet, homeowners have often been unsure of why they are not initially offered these foreclosure alternatives as an option when they may be facing financial hardship related to negative equity or due to the loss of their job.

Guidelines from the Making Home Affordable Program typically require that a mortgage servicer attempt to find a foreclosure prevention plan like a modification or a mortgage forbearance option for homeowners before offering either a short sale or deed in lieu of foreclosure plan. Ideally, homeowners who are struggling financially and may face foreclosure will benefit from either a modification or extension plan that can make their home loan more affordable and keep a homeowner in their primary residence.

Yet, when these initiatives fail, homeowners may qualify for a home loan foreclosure alternative program and in some cases gain assistance when relocating. Obviously, when it comes to any form of home loan assistance from the Making Home Affordable Program, borrowers are initially mailed a package from the program and evidence of the receipt of this package must be verified, a homeowner must then offer documentation as to their income, monthly mortgage payment, and other debt payment obligations which are required for their personal situation.

Also, servicers must determine the fair market value of a home, a recommended list price, and servicers also have to establish guidelines for paying off junior liens and establishing a minimum amount of proceeds that will approved.  However, these options for homeowners have been helpful for those who have suddenly seen financial hardships related to underwater home loans and unemployment, but homeowners have been advised to be proactive if seeking a foreclosure alternative may be an option for their situation.  Obviously, waiting while a homeowner’s situation worsens is unhelpful and could cause problems when it comes to finding more affordability on a mortgage or qualifying for an alternative program, so homeowners have been prompted to talk with their servicer or an approved housing counselor about options available for their particular home loan situation and needs.