New program helps struggling homeowners

Prior to its more recent effort, the Obama Administration introduced the Home Affordable Modification Program (HAMP) to help homeowners from falling into foreclosure.

The program allowed homeowners to request financial help and their lenders to evaluate eligibility. If it was determined they were eligible, homeowners could enter into a three-month trial program. If payments were on time during those three months, the modification would become permanent in the fourth month. Lenders were provided a kickback for offering the modifications.

However, as of last month, only 270,000, or 12.6 percent, of the modifications had become permanent, well short of the 3 to 4 million the plan had intended to help by 2012. Now a new four-letter acronym could come to the rescue: HAFA (Home Affordable Foreclosure Alternatives).

The Obama Administration rolled out the new program in mid-April as a way of helping those who did not qualify for HAMP, were unable to find success in their modification or decided to short sell after applying for HAMP.

HAFA is constructed to simplify and streamline the short sale by providing a standard process flow, minimum performance timeframes and standard documentation.

“Currently there are so many different forms required by banks, the process can become very complicated,” said Steve Murray, owner of The Maricopa Real Estate Company. However, the inconsistency of requirements from lender to lender is not the only issue.

Murray, whose firm has completed more than 100 short sales in the past year, said the biggest obstacle often standing in the way is waiting for a response.

Murray said his company typically hears from the bank within 30 to 90 days, but “we have properties we have been waiting for a response on for almost a year.”

Short sales have been a hot ticket in Maricopa, where foreclosure rates have ballooned above that of the national average.

“I would say 50 percent of the available homes are short sales,” Murray said.

Numbers released by RealtyTrac, a company that tracks foreclosure data, showed Maricopa’s rate of foreclosures was around one per every 20 households.

The national average was around one in every 130. Murray said the short sale is a step many turn to in an attempt to avoid foreclosure, but, despite the last ditch effort, about half of the homes end up at a foreclosure auction. “You’d think the banks would be more willing to accept these short sale offers,” Murray said.“Most of the time they are more than what a home is sold for at an auction.”

In order to qualify for the new program the homeowner must be in the HAMP system, the home must be the person’s primary residence, their mortgage payment must be more than 31 percent of household income and the loan had to originate before Jan.1, 2009.

To apply for the HAFA program, homeowners should visit or call their banks to inquire about how they can participate. The program is currently scheduled to run through Dec. 31, 2012, but could be extended if successful.

“I have yet to see any of these government programs work, but I hope this one does,” Murray said.

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