A program that may help Allison Park home owners who did not qualify for a loan modification is the Home Affordable Foreclosure Alternative (HAFA) program. This was launched by the Obama administration as a way of providing another alternative to foreclosure. Including incentives that may encourage lenders to allow more short sales for Allison Park home owners, HAFA is streamlining the program to benefit homeowners more.
The HAFA program had been criticized by many saying it was too strict and overly complicated. In a short sale, the lenders allow the Allison Park home to be sold for less than the loan value and they take a loss financially, however they avoid a foreclosure, which can be quite costly. The borrowers also get a cash incentive to leave the home. HAFA has made the short sale process for Allison Park home owners more efficient, however feedback from many including realtors, servicers, housing counselors and many others have stated that the process could use additional improvements, including simplifying the short sales and further benefiting homeowners.
Some of the changes included are that borrower’s finances no longer need to be verified, their monthly payment no longer needs to be checked to see if it is more than 31% of the debt-to-income ratio and second lien holders no longer have to accept 6% of the unpaid balance. The servicer would decide who is paid and the amount although the cap for second lien holders would still be $6000. HAFA does require that borrowers who are attempting a short sale get an agreement within 30 days if the short sale is approved or an answer if not.
The changes are necessary to end the delays that have stymied deals that could have been beneficial for Allison Park home owners as well as the mortgage holders. With numbers approaching 11 million homeowners who are under water when it comes to their mortgages and the number still on the rise, the housing prices are going even lower. Opponents of the new requirements fear that the program will be used by those who do not need to sell their home, but will use the new less stringent requirements to get out of a bad investment. For Allison Park home owners who are facing foreclosure, requirements that are more lenient may be the answer.