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Mortgage - Avoid Foreclosure

Updated on June 16, 2010

Fannie Mae HAFA - The Alternative to Foreclosure

This will be implemented on August 01, 2010... Definitely some good news and help!

As in previous articles I have explained that FNMA issues guidelines to those lenders/servicers to sell their loans to them and they do not furnish the money for the transaction but they buy these loans when closed. Your loan is sold to someone,somewhere; probably.

FNMA has issued and will implement a new program called the Home Affordable Foreclosure Alternative. It will be used for those borrowers who have qualified at some point for the HAMP, Home Affordable Modification Program.

This is how it will work:

  • you may actually request a short sale on your property, if you have not already, but you must still remember there are other guidelines besides being delinquent with your payment
  • the servicer of your loan will have specific guidelines that they will provide to you and there are certain forms to sign and stipulations they must follow. It is always detailed, remember that. This process should not be as lengthy as the previous modification program; but it will take time
  • you, the borrower must have qualified for the HAMP modification; based on income, but was not offered a trail modification due to inability to meet the qualifications....meaning; the debt to income ratio of 31% or
  • you failed to complete the trial period successfully or you became 2 consecutive payments or 31 or more days past due on the modified loan
  • there is one exception to occupying the property; (living in the property) if for some reason you the borrower had to relocate to a new job or were transferred by a current employer more than 100 miles from the property and you have not purchased a new dwelling of a one-to-four unit property within 90 days of the new HAFA request
  • you must have been considered for all other home retention options as per FNMA's loan workout plans
  • your financial position or condition has determined that you cannot repay the potential loss left over on the mortgage loan after short sale

Help for Avoiding Foreclosure

Best News Yet For Some

I am always ranting and raving it seems; about the Mortgage Meltdown and other bad "stuff" and the effects it has had on this country and millions of Americans. Sorry, I just tell it like it is and since I saw it first handed; it gives me a large lump in my throat. Especially when the news doesn't call it like it really is. Kind of like everybody blaming Mr. Bush for the now "oil spill." Won't they ever stop?

Actually this is the very best news that I can give to the homeowners who are facing foreclosure and are worried that if they loose their home; they may still have a debt to repay following foreclosure or short sale.

More important details to follow....

Important Details

What this program will provide for you:

  • it is to provide an alternative for all borrowers who are eligible for the HAMP (including facing imminent default)
  • the servicer will review financials again; possibly not having to update but may need to verify that you have not come into more funds than was initially disclosed; or if you have changed employers etc.
  • the borrower will be allowed to receive pre-approved short sale terms prior to the property listing....*the property must be listed with a real estate agency
  • the program will prohibit the servicer from requiring that the real estate commission be reduced as a condition of approval of the short sale, which was agreed upon in the listing agreement
  • Most important: releases the successful HAFA borrower from FUTURE LIABILITY for the debt... you can review Short Sale information.
  • there will be financial incentives to the borrower as well as the servicer

Short Sale or Deed-in-lieu Incentive - There will be a $3000 to assist with moving and finding a place to live. The short sale funds will be disbursed at closing of the current residence. Deed-in-lieu funds will be within 5 business days from closing.


This information is not intended to be conclusive of all requirements for this HAFA program regarding short sale or deed-in-lieu. It would take a mountain of pages to publish all the rules and regulations and then you would still have more as each lender will have some specific rules. Mortgage is detailed and nothing will happen over night..just being honest.

What I have given is verified and true information and from Fannie Mae guidelines. If you are having difficulty in staying in your home; this is something worth trying. Take the time to call you Servicer and inquire about an alternative to foreclosure. Read and read some knowledgeable and understand all that is possible.

Property Evaluation

The lender must use a vendor for calculating the current price and/or market value of your home specified by Fannie Mae. You cannot get an appraiser yourself. It will be an evaluation ordered by the servicer and be based upon certain requirements and they will try to get as much of the balanced owed on the loan as possible and lose as little as possible. That is justifiable. The house must be listed and yes it may be an evaluation of the interior and exterior of your home.

The condition of your home will be part of the evaluation analysis. This may take some time but per Fannie Mae; the house should not be listed more than 120 this is in your favor to some degree.


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    • lctodd1947 profile imageAUTHOR


      8 years ago from USA

      Anne, I hope you have better luck than most. They are using the 31% housing ratio which does not truly tell if a person qualified for a HAMP modification. They gross up fixed income 25%. It is a long haul for all and the guidelines do not benefit like they should. The mortgage companies do not respond as they should and it is very discouraging to say the least. Good luck!

      Thank you for stopping by!

    • Anne Foxx profile image

      Anne Foxx 

      8 years ago

      Thank you for writing this important piece. I need to call and make sure that they have forwarded our information to the underwriter. If that has happened, we should be finding out shortly if we qualify for the HAMP. It has taken dilegence [multiple lengthy phone calls] and months to get to this point. We have continued to make our "trial period" payments during this time.

    • lctodd1947 profile imageAUTHOR


      8 years ago from USA

      Habee, as always I appreciate you stopping by to read and comment. Thank you!

    • lctodd1947 profile imageAUTHOR


      8 years ago from USA

      Lady_E, thank you so much for stopping by to comment and read. I appreciate it so much and for sharing thanks. It is so sad and some of the mortgage companies are not helping the ones who need it the most.

    • habee profile image

      Holle Abee 

      8 years ago from Georgia

      Thanks for this info! Thumbs up!

    • Lady_E profile image


      8 years ago from London, UK

      Thanks for the useful info. Sadly, many people are still losing their homes and don't know where to turn. I will share this info.

    • lctodd1947 profile imageAUTHOR


      8 years ago from USA

      Prasetio30, You are so encouraging. Thank you so much for coming here and leaving this much thoughtful comment. I will try to keep it updated and it will be informative; I hope!

      Thank you again.

    • prasetio30 profile image


      8 years ago from malang-indonesia

      My friend, you always come with useful information about financial solution. That's why I never regret to be your fans. Stay keep in touch with us and update great hub. I learn much from this hub. Good work. Thank you very much.


    • lctodd1947 profile imageAUTHOR


      8 years ago from USA

      Nell, you are right it does seem that taxes is always there in some form. I appreciate you coming by to read and comment. Thanks so much!

    • Nell Rose profile image

      Nell Rose 

      8 years ago from England

      Hi, my brother recently had to sell his house, but for the inheritance tax. it seems that the government get you either way. luckily he found a nice place and is happy there, thank goodness, thanks nell

    • lctodd1947 profile imageAUTHOR


      8 years ago from USA

      James thank you for stopping by. If a short sale is possible or deed-in-lieu it makes things some better and with this program they will come back to you for the shortage. But, of course there are restrictions and guidelines they have implemented and lenders have a few of their own. Nothing about mortgage is actually simple. It takes time and patience.

    • James A Watkins profile image

      James A Watkins 

      8 years ago from Chicago

      Thank you for this informative piece. I'll keep this in mind as I go through the process.

    • lctodd1947 profile imageAUTHOR


      8 years ago from USA

      Pamela99; thank you so much for reading and yes I hope this will help. This will be effective 8/01/10.

    • Pamela99 profile image

      Pamela Oglesby 

      8 years ago from Sunny Florida

      Ictodd, My brother may end up in foreclosure. This hub has some very good information and I'm going to send him the link. Rated up!


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