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Making Home Affordable: Your Options

Recognizing that millions of Americans have lost or are in danger of losing their homes, the government has created a program with four options that may help you. The HAFA program, which simplifies short sales, is the most suitable for homeowners who do not feel that a loan modification or refinancing will provide an acceptable long-term solution.

Home Affordable Refinance Program (HARP)

HARP is available to homeowners whose loan(s) are owned or guaranteed by Fannie Mae or Freddie Mac. Under the program, four to five million homeowners will be able to refinance to today's lower mortgage rates, significantly reducing their monthly payments. Here are the eligibility requirements:

  • You are the owner-occupant of a one- to four-unit home.
  • You are current on your mortgage payments at the time you apply.

  • Your credit score is at least 620.
  • Your debt to income ratio is less than 55%.
  • You owe less than 125% of the current market value of your home. For example, if your property is now valued at $160,000, you cannot owe more than $200,000 on your first mortgage.
  • Refinancing through the program will improve your long-term ability to repay your loan.
  • This program ends in June 2011.

Home Affordable Modification Program (HAMP)

HAMP is expected to help up to 3 to 4 million at-risk homeowners avoid foreclosure by reducing monthly mortgage payments. Unlike HARP, your loan may be held by any bank or lender and you do not need to be current on your mortgage to qualify. There no modification fees. Other eligibility requirements are below:

  • You are the owner-occupant of a one- to four-unit home.
  • Your mortgage must be more than 31% of your gross monthly income.
  • You must owe $729,000 or less on a single-unit residence (this amount is higher for multiple units).
  • Your loan must have originated before January 1, 2009.
  • You can be either current or late on your payments but if you have a Notice of Sale from your lender, the sale date must be more than 60 days away.
  • You must be able to demonstrate financial hardship such as job loss, reduced income, divorce, death in the family, etc.
  • This program ends in December 2012.

Home Affordable Unemployed Program (UP)

The Home Affordable Unemployment Program (UP) provides homeowners forbearance, which is a temporary period of time during which your regular monthly mortgage payment is reduced or suspended. These are the eligibility requirements:

  • You are the owner-occupant of a one- to four-unit home.
  • Your mortgage must be more than 31% of your gross monthly income.
  • You must owe $729,000 or less on a single-unit residence (this amount is higher for multiple units).
  • Your loan must have originated before January 1, 2009.
  • Your mortgage has not been previously modified under HAMP and you have not previously received a UP forbearance period.
  • You must request that your lender consider you for UP before three mortgage payments have been missed.
  • You must be unemployed and able to document that you will receive unemployment benefits in the month of the forbearance period effective date.
  • Some lenders require that you receive unemployment benefits for up to three months before your forbearance period can begin.

Home Affordable Foreclosure Alternative (HAFA)

HAFA establishes streamlined procedures to help homeowners take advantage of short sales. In a Short Sale, the homeowner sells the property for less than the full amount due on the mortgage. Through HAFA, homeowners receive pre-approved short sales' terms before listing the property with a qualified real estate agent. While the property is on the market, a temporary loan modification will ensure that loan payments do not exceed 31% of the homeowner's gross monthly income. With the sale, borrowers are fully released from any future liability on their property or loans and can receive $1,500 for relocation assistance.

Banks and lenders are incentivized to participate as the program covers administrative costs, processing fees, etc. The other option available through HAFA is a deed-in-lieu of foreclosure, where the homeowner voluntarily gives the deed of the property to the lender.

To be eligible for HAFA, you must meet the following guidelines:

  • You are the owner-occupant of a one- to four-unit home.
  • Your mortgage must be more than 31% of your gross monthly income.
  • You must owe less than $729,000 on a single-unit residence (this amount is higher for multiple units).
  • Your loan must have originated before January 1, 2009.
  • You can be either current or late on your payments but if you have a Notice of Sale from your lender, the sale date must be more than 60 days away.
  • You must be able to demonstrate financial hardship such as job loss, reduced income, divorce, death in the family, etc.
  • You either do not qualify for HAMP, have not successfully completed the HAMP trial period, you are delinquent on a HAMP modification, or you simply request a short sale.

Benefits of HAFA:

  • Pre-approved terms for the short sale of your home
  • Full release from liability on your mortgage with sale
  • Reduced mortgage payments (if applicable) while your home is on the market
  • A $1,500 "bonus" to help with moving expenses

With the HAFA Program, as with any short sale, it is critical to have an experienced and knowledgeable real estate professional working on your behalf. HouseRebate's agents are familiar with short sale guidelines and have cash-ready buyers. We will work hard to market and sell your property, ensuring the process is quick, easy and hassle-free.

For more about Short Sales, click here

Read about the benefits of a Short Sale vs. Foreclosure here