Can HUD Stop Foreclosure of My Home?
The Department of Housing and Urban Development (HUD) sponsors a number of programs designed to assist those looking to purchase a home and current homeowners. HUD also administers the Making Home Affordable programs, which are designed to assist homeowners in danger of foreclosure.
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Types
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Making Home Affordable (MHA) is a plan initiated by the Obama administration to stimulate the economy and real estate market. Initiatives under MHA include the Home Affordable Refinance Program (HARP), the Home Affordable Modification Program (HAMP), the 2nd Lien Modification Program (2MP) and the Home Affordable Unemployment Program (UP). Specifically designed to help homeowners avoid foreclosure is the Home Affordable Foreclosure Alternatives Program (HAFA).
Function
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The HAFA program offers two options: short sale and deed-in-lieu of foreclosure. Short sale allows the homeowner to list and sell the property, with the proceeds of the sale going to the mortgage servicer. The servicer agrees to accept the proceeds of the sale even if that amount is less than what is due on the mortgage. Deed-in-lieu of foreclosure allows the homeowner to transfer ownership of the property to the servicer. Some servicers may require the homeowner to attempt to sell the home first.
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Benefits
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Under HAFA, homeowners who successfully complete a short sale or deed-in-lieu are cleared of all debt and obligation to their mortgage servicers. Additionally, HAFA may provide eligible participants with $3,000 to help with relocation costs.
Eligibility
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HAFA is available for those who do not qualify for a trial mortgage modification under the Making Home Affordable program. Homeowners who do not successfully complete the mortgage modification trial period, or miss two or more consecutive payments during the mortgage modification period, are also eligible.
Time Frame
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Strict time lines exist for the HAFA program. Potential HAFA participants must be evaluated by the mortgage servicer within 30 days of meeting eligibility criteria. If the homeowner is found to be eligible, either a short sale agreement or deed-in-lieu agreement will be sent to the homeowner by the mortgage provider.
Considerations
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Any other loans against the house must be released before proceeding with a short sale or deed-in-lieu. HAFA has funds available to assist with paying off junior loans.
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