Many of the nation’s top financial institutions have participated in the Making Home Affordable Program over the past year or more, but there are also options that homeowners have been able to access through programs like short sales or deed in lieu of foreclosure plan, which have been one method that homeowners have used to avoid a formal foreclosure process. Homeowners who have been suffering from unemployment or other financial setbacks, as well as underwater mortgages, have usually been those who were able to benefit from these programs, and more so, homeowners who were unsuccessful at receiving a home loan modification have also had these opportunities as well.
According to the December 2010 Making Home Affordable Report, the top eight servicers and the Making Home Affordable modification program who had homeowners that had their trial modification canceled saw 33,604 of these homeowners enter into either a short sale or deed in lieu of foreclosure agreement. Also, the same report tracked the disposition of homeowners who were initially not even accepted for a trial modification but were offered these foreclosure alternative options and that number stood at 54,574.
Obviously, homeowners would much rather avoid the loss of their home through a foreclosure prevention plan, but in cases where the loss of their home is inevitable, homeowners may benefit from either a short sale option where an underwater mortgage may be present, or a deed in lieu of foreclosure plan in cases where a homeowner has shown they have a substantial amount of financial distress that is the cause of their inability to meet their monthly mortgage payment. Again, homeowners who may have suffered from unemployment or have seen such a reduction in their property value that affordability on their mortgage payment is simply no longer an option can escape the damage to their credit that comes with a formal foreclosure through one of these alternative programs.
Homeowners are still being prompted to explore options for foreclosure prevention through proprietary modifications, federal home loan modification plans, and extension programs that may address issues like unemployment, but those who are unsuccessful at receiving a home modification plan from HAMP do have these options of either short sales or deed in lieu of foreclosures, as they could put homeowners in a position where, thanks to taking less of a hit on their credit score, they may be able to reenter the housing market sooner once their financial troubles have passed.