“If you can’t afford your mortgage payment and it’s time for you to transition to more affordable housing, the Home Affordable Foreclosure Alternatives (HAFA) program is designed for you,” the U.S. Department of Housing and Urban Development (HUD) says.
HAPA program provides two options: short sale and a Deed-in-Lieu (DIL) of foreclosure.
HAPA short sale and DIL are available for mortgages that are guaranteed or owned by Freddie Mac, Fannie Mae or those mortgages that are serviced by more than 100 Home Affordable Modification Program (HAMP) participating mortgage servicers.
In HAPA short sale, HUD says, the mortgage company lets you sell your house for an amount that falls “short” of the amount you still owe; while in a DIL, the mortgage company lets you give the title back, transferring ownership back to them.
Here are the advantages of HAPA’s short sale and DIL:
.You can get free advice from HUD-approved housing counselors and licensed real estate professionals.
.Unlike conventional short sales, a HAFA short sale completely releases you from your mortgage debt after selling the property. This means you will no longer be responsible for the amount that falls “short” of the amount you still owe. The deficiency is guaranteed to be waived by the servicer.
.In a HAFA short sale, your mortgage company works with you to determine an acceptable sale price.
.HAFA has a less negative effect on your credit score than foreclosure or conventional short sales.
.When you close, HAFA provides $3,000 in relocation assistance.
If you meet all of the following criteria, you may be eligible for HAFA’s short sale or DIL:
.You live in the home or have lived there within the last 12 months.
.You have a documented financial hardship.
.You have not purchased a new house within the last 12 months.
.Your first mortgage is less than $729,750.
.You obtained your mortgage on or before January 1, 2009.
.You must not have been convicted within the last 10 years of felony larceny, theft, fraud, forgery, money laundering or tax evasion in connection with a mortgage or real estate transaction.