Homeowners who are seeking federal assistance from the Home Affordable Foreclosure Alternatives Program are usually in a position where, as a result of financial hardships or negative equity, and sometimes a combination of both, either a short sale or deed in lieu of foreclosure plan is pursued as result and the HAFA program was implemented as a way to allow servicers and homeowners to work towards these goals. Here in early October we have information running through the month of August which has shown some improvements in the federal initiative, but homeowners may not always be looking for this particular type of help when it comes to finding aid with their mortgage payment problems.
Yet, the number of Home Affordable Foreclosure Alternatives agreements that were started increased between July and August, according to Treasury data, as 25,716 agreements were reportedly started as of July but this number increased to 28,953 in August. Yet, the number of active HAFA agreements decreased between these two months as these numbers fell from 10,428 to 9,958. However, completed transactions increased by a little over 3,000, which suggests that homeowners are still seeing progress in this particular area of the Making Home Affordable Program.
Progress in this area may be beneficial for homeowners who, once again, are in a position where a short sale or deed in lieu of foreclosure plan may be advantageous, but this does not mean that every homeowner who fails to receive a modification plan on their mortgage payment will have to necessarily resign themselves to this foreclosure alternatives initiative. In fact, there have been some homeowners who wish to explore alternative routes for foreclosure prevention assistance rather than sell their home or surrender their deed, despite the fact that there are some homeowners who want to sell their home as a result of negative equity or others who have been offered the opportunity to read their home if they participate in one of these programs or a similar initiative by a specific mortgage servicer.
Understandably, homeowners do stand to potentially see some negative effects of these programs on their credit score, particularly if they have missed payments and other areas like unsecured credit cards, personal loans, or other debt obligations, but there are also some arguments that homeowners may see a drop in the credit score because of a short sale or deed in lieu of foreclosure agreement. Yet, this again is something that some homeowners have pursued simply because negative equity has been a major hindrance for numerous homeowners and the opportunity to sell their home in a loss as seem quite attractive even if there are some adverse effects that may arise.
While most of the major mortgage servicers are participating in this particular foreclosure alternatives program, homeowners may also be in a position to discuss assistance from principal reduction options or other efforts that may make their mortgage payment more affordable if they wish to stay in their home and avoid one of these alternatives. Not all homeowners will find success in these areas, but it does need to be remembered that HAFA is not the only opportunity homeowners have when it comes to finding a solution to their mortgage payment troubles.