Underwater homeowners who are still suffering from negative equity are looking for ways which they may be able to find debt relief through underwater refinancing options but they may be in a situation where opportunities like short sales are there only avenue of escaping a negative equity situation as a result of seeing the value of their home drastically drop. The popular Home Affordable Foreclosure Alternatives initiative has allowed homeowners to participate in not only short sales but deed in lieu of foreclosure plans as well, and this route is not something new as numerous men and women have been aware of this particular foreclosure alternative plan when they may be unable to find an option to help them reduce their underwater mortgage payment costs.
Luckily though, homeowners who feel that a short sale is right for them are seeing increases within HAFA, despite the fact that there may be other short sale opportunities and foreclosure alternatives available directly from a servicer or similar programs. Yet, the foreclosure alternatives plan has also seen increases in the number of total completions and a number of programs that are beginning as the Treasury Department recently reported an increase from the months of May to June of this year.
As an example, the top servicers participating in the Home Affordable Foreclosure Alternatives program had started at 17,781 HAFA plans as of May and completed 8541. Yet, that total increased in the month of June to 21,412 starts and 10,754 completions. What homeowners may be unsure of is whether a short sale program will be right for their situation, as some homeowners may stand to see a setback in their personal financial life by participating in a short sale that will be comparable to a decrease in their credit score that would have come if foreclosure had taken place.
However, arguments are being made that homeowners may be able to qualify for certain types of financing sooner if a short sale is on their credit history rather than a foreclosure, as this may show that a homeowner could have suffered financial distress out of their control and rather than simply defaulting, worked with their homeowner to find a solution for the predicament that surrounded their property. There are mixed reports being seen in certain areas of the nation where home prices are beginning to move upward once again, but of course there are still homes seeing property value reductions or little movement in this area.
Yet, homeowners may also be able to escape a short sale altogether as some financial institutions are finding buyers difficult to come by and there are realtors who have complained that the short sale process is problematic in that communication breakdowns have occurred, banks have foreclosed on a home while a short sale agreement was being worked out, or again there are simple situations which arise where a homeowner cannot find a buyer for their home. Since many banks have numerous properties simply sitting empty and not enough buyers to absorb this inventory, homeowners may want to explore all of their foreclosure prevention options first before turning to these short sale plans, as there are some banks that may offer underwater mortgage assistance options that could bring payment affordability and even assistance in dealing with a homeowner’s mortgage principal.