J.P. Morgan Chase homeowners have seen an increase in the number of Home Affordable Foreclosure Alternatives programs that have been made available over the past few months, specifically between June and July, as opportunities like short sales and deed in lieu of foreclosure programs were made more available to homeowners with Chase during this timeframe. Homeowners who are negative equity position, in most cases, are those who are seeking to take advantage of these plans, but there are some instances where homeowners may simply not qualify for other forms of foreclosure prevention assistance and, as an example, may opt to surrender the deed to their home rather than face foreclosure.
In these cases, homeowners have worked with their servicer to either process a short sale or deed in lieu of foreclosure plan, and with J.P. Morgan Chase, the number of HAFA agreements that have been started in total increased from 7,722 in June to 10,191 in July. Also, the number of total agreements that were completed between these two months rose from 3,596 to 4,621. However, homeowners are being advised by some to make sure they explore all foreclosure prevention options that may be available in their state or from their servicer, as a short sale or deed in lieu of foreclosure plan may still do damage to a homeowner’s credit score.
As an example, homeowners who may participate in a short sale have easily done so as a way to escape their negative equity situation and, in some cases, as a way to get free from a mortgage obligation that may be too expensive for their personal finances at the current time. Yet, just because homeowners are able to avoid a formal foreclosure does not mean that they will escape any negative setbacks in their credit rating, as some homeowners may see their FICO score drop to a level that is similar to what they would see if foreclosure had taken place.
The good news for homeowners with J.P. Morgan Chase though, there are opportunities beyond simple modifications that are available as Chase not only works with homeowners to provide extension programs, like initiatives that may help address negative equity specifically or unemployment, but states that are offering aid from the Hardest Hit Fund are also working with servicers like Chase to help homeowners in those specific areas where foreclosure prevention aid may be needed beyond the federal modification program.
However, homeowners do need to realize that these short sell or deed in lieu of foreclosure plans can be helpful in some ways, if it suits a homeowner’s needs, as it will allow a homeowner to be free their mortgage obligation, in most cases, but this too is an area where homeowners must make sure they are careful to understand the agreement. While the point of HAFA it is to alleviate homeowners of the financial strain associated with their home, homeowners do need to make sure that their bank will not try to pursue them for the difference in what they owed and what the home sold for, as this is going to only increase the financial troubles that some homeowners may already have in place.