By now we are all aware of the HAMP program and how it has "extended and pretended" the foreclosure problem in this country ( less than 1% of trial mortgage modifications become permanent modifications).
But you probably didn't know that the HAMP program has a sub-clause called HAFA, and HAFA is going to unleash a closurefraud.org/2010/01/03/hafa-new-program-offers-borrowers-foreclosure-alternatives/"> foreclosure bomb on the housing market this spring.
As part of the Home Affordable Modification Program (HAMP), HAFA provides financial incentives to servicers and borrowers who utilize a short sale or a deed-in-lieu (DIL) to avoid foreclosure on a HAMP-eligible loan.
The HAFA program simplifies and streamlines the use of short sale and DIL options by incorporating the following unique features:
Requires that borrowers be fully released from future liability for the debt.
Did you catch that? Servicers participating in HAMP must must follow the guidelines in this supplemental directive. This goes into effect on April 5, 2010 and applies to all of the 750,000 HAMP-programmed mortgages from 2009.
Servicers must consider a HAMP-eligible borrower for HAFA in accordance with their policies within 30 calendar days of the date the borrower:
* Does not qualify for a HAMP Trial Period Plan,
* Does not successfully complete a HAMP Trial Period Plan,
* Is delinquent on a HAMP modification by missing at least two consecutive payments, or
* Requests a short sale or DIL.
Only about 31,000 of the HAMP trial period mortgages have become permanent. Thus we are looking at about 3/4 of a million homes being forced onto the market in short-sales and "deed in lieu" sales this spring.