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The Difference Between HAMP and HAFA

GeorgetteMillerLaw.com > The Difference Between HAMP and HAFA

The federal Making Home Affordable Program includes the Home Affordable Foreclosure Alternatives Program, or HAFA, and the Home Affordable Modification Program, or HAMP. The goal of these programs is to help to stabilize the housing market, to improve the economy and to help homeowners to avoid foreclosure.

HAFA lets borrowers use deeds in lieu of foreclosure or short sales to get out from under their mortgages. HAMP helps homeowners to avoid foreclosure through the modification of first mortgages secured by the homes.

Home Affordable Modification Program

Through loan modifications, HAMP helps by lowering the monthly payments so that they are more affordable for the borrowers.

Participating loan servicers for HAMP

Servicers of mortgages that are guaranteed or owned by Freddie Mac or Fannie Mae must participate in the program. Servicers of other mortgages that are not guaranteed or owned by Freddie Mac or Fannie Mae may participate on a voluntary basis, but they are not required to do so.

Eligibility for HAMP

Homeowners may be eligible for the program if they meet all of the following requirements:

  • The mortgage must have been originated on Jan. 1, 2009 or earlier
  • The outstanding mortgage amount may not be more than $729,750 for a primary home or a rental property with one unit
  • The outstanding mortgage for a 2-unit rental property cannot exceed $934,200
  • The outstanding mortgage amount for a 3-unit rental property cannot exceed $1,129,250
  • The outstanding mortgage amount for a 4-unit rental property cannot exceed $1,403,400
  • The property cannot be one that has been condemned
  • The borrower must be undergoing a financial hardship and is either in danger of falling behind on his or her payments or is already behind
  • The borrower must have an income that is sufficient to pay a modified payment
  • The borrower may not have been convicted within the past 10 years of felony theft, fraud, money laundering, forgery, larceny or tax evasion in connection with a real estate transaction or mortgage.

Home Affordable Foreclosure Alternatives Program

Under HAFA, borrowers may avoid foreclosure proceedings by either completing a short sale or a deed in lieu of foreclosure. HAFA is available for homeowners whose mortgages are guaranteed or owned by Freddie Mac or Fannie Mae or that are serviced by loan servicers who are participating in the program.

Short sales and HAFA

Short sales involve selling homes for less than the remaining debt balances on the mortgages. The proceeds from the sales are used to pay a part of the mortgage’s balance.

With short sales under HAFA, loan servicers approve the terms of the short sale before the home is listing. The payoff from the sale is then accepted to fully satisfy the mortgage. This differs from a traditional short sale because lenders outside of HAFA are allowed to pursue the borrower after a short sale through obtaining a deficiency judgment against him or her.

HAFA deeds in lieu of foreclosure

Deeds in lieu of foreclosure are when the mortgage lenders agree to accept the deeds instead of foreclosing on the mortgages.

With a deed in lieu of foreclosure under HAFA, the homeowner fully satisfies his or her mortgage debt upon his or her voluntary transfer of ownership of the home. The property may not have other liens, encumbrances or mortgages against it. Loan servicers are allowed to ask that the homeowner first market and list the property for sale before approving the deed in lieu of foreclosure.

Eligibility for HAFA

In order to be eligible for HAFA, homeowners must meet the following criteria:

  • There must be a documented financial hardship
  • A new home must not have been purchased within the past 12 months
  • The mortgage must be less than $729,750
  • The mortgage must have originated on or before Jan. 1, 2009
  • The borrower may not have convictions for felony tax evasion, money laundering, forgery, fraud, theft or larceny in connection with a real estate transaction or mortgage from the previous 10 years.

People who complete HAFA deeds in lieu of foreclosure or short sales may also be eligible to receive up to $10,000 to help with their moving expenses.

Contact Our Attorneys

To learn more about your eligibility for HAMP or HAFA, schedule your free appointment by calling 1-866-964-6529.