The Government’s Making Home Affordable plan gets another makeover with the addition of the Home Affordable Foreclosure Alternatives or HAFA. Though many have benefited from the affordable home incentives and provisions, the program has not really met expectations and it has largely failed to revive interest in the housing market.
The Obama administration is still fervently making policy changes and bringing in new schemes to make it easier to own a home.
The HAFA is part of these ongoing efforts and it ushers in incentives and attractive terms for home owners struggling to repay mortgage loans. The program sets out guidelines for a deed in lieu or a short sale of a home, which is not paid for fully by the buyer. The lender will be required to write off the difference between the sale price and the dues owed by the borrower under this scheme.
There will be something in it for both borrowers and lenders. The government hopes that with this scheme, lenders who are stuck with unrecoverable loans and borrowers who are over-burdened by dues will get a chance to break the deadlock.
The primary aim of the HAFA program is to render long winded and often costly foreclosure procedures unnecessary. The lender stands to recoup at least some part of the losses through the property in question. The buyer may get up to $3000 in relocation and other costs if the sale price is so much lower than the mortgage dues that he will be left with no cash after the sale closes.
There are certain conditions that will have to be fulfilled for a borrower to qualify for a HAFA sale. The borrower must be living in the property and using it as his primary residence, and he must be behind payment on his loans. Some restrictions will also apply related to the amount of mortgage and the date by which it was taken.
While the program appears to be a promising one and brings many advantages to both parties in a mortgage, most analysts are skeptical of the success that it may enjoy. With HAFA and the Affordable Home program being voluntary, it remains to be seen just how many lenders benefit from the new policies. But one thing is certain – the housing market will need many such programs on a sustained basis to recover from the situation that it is in.