HAMP and HAFA Programs

Bobbi Decker, CRS, GRI, SRES

Real Estate is an ever-changing, ever evolving cycle of events. I have been in it for a long, long time and just when I think I have seen it all…Voila!!! There is a whole different scenario. This time, in this cycle, the profound lack of trust is up-ending the market. It casts a pall over the fabulous interest rates, compelling prices and generally great buyer’s market that we are in. For sure, there have been other challenging cycles,

but this one involves people who truly feel that no one “has their back”. Who can blame them…many promises were made and not kept. Consumers were promised loan modification programs that were to help “millions”. Through August 2010, these programs have helped approximately 450,000 borrowers only. That is quite a discrepancy.

No one clearly understands what they are supposed to do to get the help they really seek. Do they default (not pay on the loan) to get attention? Should they keep up the payments and seek help from the lender emphasizing that they are good citizens because they are keeping up with the payments despite the drop in value? Should they engage in a short sale? Everyone has an opinion, but the only one you should be interested in is your trusted tax attorney or CPA.

Please remember one thing from this article. To date, no one has been approved by the Dept. of Real Estate to collect upfront fees for helping you with loan modifications or as they are calling their programs now “forensic loan reviews”. That is supposed to mean they are checking all your loan documents for discrepancies. If they want to do this free of charge, cool. However, asking for an upfront fee to do so is unlawful. As the Dept. of Real Estate said during the last Real Estate State convention “to collect up-front fees, you must have DRE approval and the DRE has not given ANYONE approval to collect fees upfront.

Let me bring to your attention programs that are legitimate and that can provide the distressed owner with some possible solutions. The newest on the block are two government programs….HAMP- the Home Affordable Modification Program and HAFA- the Home Affordable Foreclosure Alternatives. HAMP was announced in Feb. 2009 and is available until December 31, 2011. This program is designed to help homeowners retain their homes through loan modifications. HAFA is geared towards foreclosure alternatives. It is intended to complement the HAMP program by making the transition into a short sale easier for the owner if he/she does not qualify for a loan modification. In both cases, the primary goal is to help the owner stay in their home.

I will cover both programs in the coming weeks in more detail. Meanwhile, if you would like to read up on them yourselves the website is http://www.realtor.org/government_affairs/short_sales_hafa .