Many homeowners have been opting to participate in a short sale or deed in lieu of foreclosure plan and, for Bank of America, there has been some information recently released on how successful these efforts from the Home Affordable Foreclosure Alternatives program is going for homeowners seeking this form of transition from their current mortgage obligation. Typically, banks will require that a homeowner apply for and be reviewed to receive a home loan modification, but in cases where a homeowner does not qualify for home loan modification assistance or cannot meet the payments within a home loan modification plan, alternative options may be used so that foreclosure can be avoided.
While many of the major banks participating in the federal home loan modification program also will allow homeowners to explore HAFA options, Bank of America has reportedly started 2524 HAFA agreements and completed 1630. This data is through the month of May and has been released by the Treasury Department here in July for review, so homeowners may be able to look at these alternative options if meeting their monthly mortgage payment is impossible and foreclosure prevention options do not help.
Last month there were various reports that stated some homeowners were getting help in the realm of short sales by some mortgage servicers due to the fact that if a bank works with a homeowner to process a short sale it may help cut down on the time that a property is without an owner, which when looking at the housing market presently, has been a problem. While Bank of America is not the only financial institution to see this issue arise, numerous homes are sitting empty as a result of foreclosure and there are far too few buyers that are currently in the market to fill these homes.
These properties, some of which are falling into disrepair, are one of the factors that is leading current devaluation or past negative equity issues that have been seen in the housing market, but if homeowners are facing the loss of their home, short sales may be the best way to avoid having a home sit empty for months. Yet, homeowners need to understand that when it comes to working with their servicer, a short sale may not always be guaranteed, but these alternatives made available through the Home Affordable Foreclosure Alternatives initiative may help through deed in lieu of foreclosure plans also.
There are some officials who want homeowners to know that, in terms of a decrease in a homeowner’s FICO score, short sales or deed in lieu of foreclosure programs could cause a similar amount of damage, so homeowners will want to exhaust all avenues of foreclosure prevention with their bank. Bank of America does participate in federal modifications and proprietary home modification plans, but there are homeowners in certain states that may also be able to take advantage of foreclosure prevention plans, so just because HAFA is an option does not mean that it should necessarily be a homeowner’s primary goal.