New and Expanded HAFA Guidelines Offer Great Incentives to Struggling New Jersey Homeowners

The Home Affordable Foreclosure Alternatives Program (HAFA) is a project administered by Fannie Mae seeking to incentivize use of foreclosure alternatives, like a short sale or deed in lieu. HAFA provides benefits not just to homeowners but also to lenders. In that way, when borrowers take advantage of the benefits provided by HAFA their lender also has built-in incentives to participate in the foreclosure alternative process. It is a win-win, and homeowners are well-served by learning about the program and investigating to determine if they can benefit.

New Guidelines

In fact, at the beginning of this month favorable changes took effect to the HAFA Short Sale Guidelines–HAFA Supplemental Directive 12-02. The changes impact short sales by those with non-government sponsored loans, including big lenders like Bank of America, JPMorgan Chase, Wells Fargo, and others. Those working on New Jersey short sales and other foreclosure alternatives appreciate that these are significant changes which will allow more homeowners to take advantage of the program.

In the past HAFA guidelines were somewhat strict regarding maximum income levels and payment history for those seeking to qualify. Yet, the recent revamping was made to expand the pool of participants. Some the recent changes include:

-Extended time frame. The program now extends to short sales or deeds in lieu of foreclosure initiated through the end of 2013. The transaction closing date must be on or before September 30, 2014.

-No “occupied” requirement. In the past, only “owner-occupied” homes qualified; however, no longer. Investment properties may now take advantage of the program. However, property owned or secured by a business still may not qualify.

-Changed income requirements. To qualify, mortgage payments can now exceed 31% of the borrower’s gross  monthly income. This change is less restrictive than under previous HAFA rules.

-Junior lien incentives. Total cash payments to junior lien holders (like a second mortgage lender) are increased to $8,500 from $6,000. This provides even more incentive for these lenders to go along with a short sale or deed in lieu as opposed to pushing for a foreclosure.

-Credit rating improvement. Negative credit rating effects following a short sale are minimized for borrowers.  Following the short sale or deed in lieu the loan will show as “paid or closed account/zero balance.” This will help the borrower move on to a new opportunity more readily, without long-term credit consequences.

There are various other facets to these updated guidelines. Importantly, the new guidelines apply to all new HAFA-eligible short sales as well as current HAFA short sales that have yet to close. Be sure to visit with a legal professional to learn more.

See If You Qualify Today

If you are behind on mortgage payments or worry about falling behind soon, there is simply no better time to  consult with an attorney to learn about programs designed to help. The HAFA incentives represent just one of many different options providing thousands of dollars in relocation assistance and other support to those pursuing  foreclosure alternatives.

The Burlington County foreclosure attorney at Dash Farrow is available to assist all nearby residents on these issues. New and Expanded HAFA Guidelines Offer Great Incentives to Struggling New Jersey Homeowners The Home Affordable Foreclosure Alternatives Program (HAFA) is a project administered by Fannie Mae seeking to incentivize use of foreclosure alternatives, like a short sale or deed in lieu. HAFA provides benefits not just to homeowners but also to lenders. In that way, when borrowers take advantage of the benefits provided by HAFA their lender also has built-in incentives to participate in the foreclosure alternative process. It is a win-win, and homeowners are well-served by learning about the program and investigating to determine if they can benefit.

CategoryReal Estate