The new program, Home Affordable Foreclosure Alternatives, or HAFA, kicks off in April 5. Some real estate industry experts see it as a response to the limited success of a government loan modification drive known as the Home Affordable Modification Program, or HAMP.
Under the new HAFA program, if a homeowner doesn't qualify for a HAMP modification they must be offered a short sale. Borrowers can also be offered a deed in lieu of foreclosure.
Homeowners who qualified for a HAMP modification, but have missed two consecutive payments, will also be offered a short sale or deed in lieu through HAFA.
A short sale happens when the borrower and the mortgage servicer agree to sell a home for less than the value of the loan or loans. A deed in lieu of foreclosure occurs when a homeowner voluntarily gives the deed of the property to the servicer.
To help kick-start HAFA, there are government incentives. Borrowers get $1,500 to help them move to a new home and up to $3,000 in short sale proceeds can be given to holders of second mortgages on the homes in the program.
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