The government’s Making Home Affordable Program, which includes the Home Affordable Modification Program (HAMP) and the Home Affordable Foreclosure Alternatives Program (HAFA), was developed to help homeowners avoid foreclosure, stabilize the housing market, and improve the overall economy.
The HAMP program helps homeowners avoid foreclosure by modifying first lien mortgages and HAFA permits borrowers to exit the property gracefully by way of a short sale or deed in lieu of foreclosure.
HAMP assists borrowers by modifying their first lien mortgages so that the monthly payments are lower and more affordable.
The government requires that servicers of loans owned or guaranteed by Fannie Mae or Freddie Mac participate in HAMP. To find out if either Fannie Mae or Freddie Mac owns your loan, go to www.fanniemae.com/loanlookup and www.freddiemac.com/mymortgage.
Participation in HAMP is voluntary for servicers of non-Fannie Mae/Freddie Mac loans. A current list of participating servicers is available at www.makinghomeaffordable.gov/get-assistance/contact-mortgage/Pages/default.aspx.
Homeowners are potentially eligible for HAMP if they meet the following criteria:
For more information on HAMP, see Mortgage Modification and Refinancing Under HAMP.
HAFA provides two options so that borrowers can avoid foreclosure by arranging a graceful exit from the property: a short sale or a deed in lieu of foreclosure. Just like with HAMP, these programs are available for mortgages that are owned or guaranteed by Fannie Mae and Freddie Mac or serviced by participating servicers.
A short sale is when you sell your home for less than the total debt balance remaining on your mortgage and the proceeds of the sale pay off a portion of the mortgage balance. (Learn more about short sales to avoid of foreclosure.)
With a HAFA short sale, the loan servicer approves the short sale terms prior to listing the home and then accepts the payoff in full satisfaction of the mortgage. This is different from conventional short sales where the lender may be able to pursue a deficiency judgment following the short sale. (To learn more about deficiency judgments in the short sale context, see our article How to Avoid a Short Sale Deficiency Judgment.)
A deed in lieu of foreclosure occurs when a lender agrees to accept a deed to the property instead of foreclosing in order to obtain title. (Learn more about deeds in lieu of foreclosure.)
With a HAFA deed in lieu of foreclosure, the homeowner voluntarily transfers ownership of the property to the lender in full satisfaction of the debt. The property must be free and clear of other mortgages, liens, or other encumbrances. The loan servicer may require that the homeowner list and market the property for sale before a deed in lieu transaction will be approved.
Homeowners are potentially eligible for HAFA they meet the following requirements:
If you complete a HAFA short sale or deed in lieu, you may be eligible for up to $10,000 to assist with your relocation expenses.
To obtain more information about HAFA short sales and deeds in lieu of foreclosure, visit the federal Making Home Affordable website at www.makinghomeaffordable.gov. Choose "Explore Programs" and then "View All Programs."