Because the US has been having trouble in the housing and real estate markets, the United States Government has taken steps to make homes more affordable. For instance, we recently talked about how the US Government has given home buyers tax credits and their extension of that successful program. They've also taken steps to help lower payments for distressed homeowners: those who are having trouble paying their mortgage. This program is known as the Home Affordable Modification Program, known as HAMP.
The Home Affordable Modification Program has seen limited success, though. And lenders have not fully understood how the program works: and apparently bans and mortgage companies don't have enough personnel to administer the program. And then there's the issue with the banks and mortgage companies making the process even more difficult by haggling with and offering to buy or getting into negotiations with subordinate lenders. Now, we're hearing of a new program to be offered, called the Home Affordable Foreclosure Alternatives Program.
What is the Home Affordable Foreclosure Alternatives Program? Here are some of its benefits:
- Borrowers will receive $1,500 in relocation expenses from the US Government.
- Loan Servicers will receive $1,000 from the US Government per transaction that they process.
- 2nd lien holders will receive up to $3,000 of the sale proceeds for releasing their liens.
- 1st lien investors can receive up to $1,000 from the US Government for "signing off" on payments that subordinate lien holders.
- Borrowers must be "fully released" from any and all further liability.
These are the basics of this new "Home Affordable Foreclosure Alternatives Program" that provides actual financial incentives for completing short sales or a deed-in-lieu of transaction.
These new guidelines are ultimately designed to get the process to go faster and include an "amenable resolution" for all of the parties concerned in the transaction, including the loan servicers, lien holders, and the borrowers.