Provisions of Home Affordable Foreclosure Alternatives
■ Complements the Home Affordable Mortgage Program by providing a viable alternative for borrowers (the current homeowners) who are HAMP eligible but nevertheless unable to keep their home.
■ Uses borrower financial and hardship information already collected in connection with consideration of a loan modification.
■ Allows borrowers to receive pre-approved short sales terms before listing the property (including the minimum acceptable net proceeds).
■ Requires borrowers to be fully released from future liability for the first mortgage debt (no cash contribution, promissory note, or deficiency judgment is allowed).
■ Uses standard processes, documents and time frames/deadlines.
■ Provides the following financial incentives: $3,000 for borrower relocation assistance; $1,500 for servicers to cover administrative and processing costs; up to $2,000 for investors who allow up to $6,000 in short sale proceeds to be distributed to subordinate lien holders, on a 1-for-3 matching basis.
■ Requires all servicers participating in HAMP to implement HAFA in accordance with their own written policy, consistent with investor guidelines. The policy may include factors such as the severity of the potential loss, local markets, timing of pending foreclosure actions and borrower motivation and cooperation.