Bank of America was one of the financial institutions who saw an increase in the number of agreements made within the federal Home Affordable Foreclosure Alternatives program, which consists of either a short sale or deed in lieu of foreclosure option that homeowners may use to help them avoid a formal foreclosure when factors like negative equity or the inability of the homeowner to meet their mortgage payments happens to be in place. Some of the top financial institutions in our nation are participating in these plans as part of the Home Affordable Modification Program, but homeowners are seeing different results when it comes to servicers who are using these plans to help homeowners facing financial distress.
Recent data from the Treasury Department indicated that Bank of America saw an increase in not only the number of agreements they have started but also the total agreement completed under this program, as the reports released in the month of May tracking this particular data stated that Bank of America had 2,524 agreements started and 1,630 HAFA agreements completed, but the most recent information we have from the month of June states that there were 2,824 agreements started and 1,873 agreements completed with Bank of America.
Homeowners who are unaware of this program may fail to explore this as an alternative to foreclosure, as surrendering a deed or simply participating in a short sale are routes that homeowners have chosen to take when foreclosure seemed inevitable, but there are those who argue that these programs may not be as beneficial as some homeowners believe them to be. As an example, some homeowners want to avoid foreclosure so they will participate in one of these foreclosure alternative plans, but there was information released earlier this year that stated some homeowners are seeing a comparable decrease in their credit score when they participate in a short sale or deed foreclosure program than had they simply allowed foreclosure to occur.
Yet, for Bank of America homeowners who may be considering participating in HAFA might benefit, according to some officials, due to the fact that a short sale or deed in lieu of foreclosure program, which may lower a homeowner’s credit score, could still potentially be seen in a more positive light by a future lender foreclosure. While this is not guaranteed, homeowners who are able to participate in these foreclosure alternatives programs are usually in a position where they have seen decreases in their income, which may be the result of unemployment or financial circumstances that were beyond their control.
Obviously, any homeowner with Bank of America or any other financial institution that has these problems arise may benefit from a modification, but if certain factors are in place that does not allow homeowners to take advantage of this route and one of these alternatives is explored or even used, homeowners may be seen as having worked with their servicer to find a solution for these financial problems rather than just allow their home to be taken back by their servicer. While a short sale or deed in lieu of foreclosure plan isn’t necessarily perfect, as it is ultimately a case where a homeowner will lose their properly, homeowners can consult with housing counselors or their mortgage servicer to see if this option would be beneficial for their situation as it will not necessarily be the best option for all. Yet, many advisers and counselors urge homeowners to make sure they look at every foreclosure prevention opportunity that may be available first so that they will stand a better chance at keeping their home rather than losing it in one of these foreclosure alternative plans.