the homeowners cannot qualify under Making Home Affordable for a trial mortgage modification
Although both the Home Affordable Foreclosure Alternatives Program (HAFA) and the Home Affordable Modification Program (HAMP) fall under the US Treasury Making Home Affordable Program, HAFA is used to short sale the property whereas HAMP is used to modify the property. If the homeowner fits within the basic parameters of Making Home Affordable guidelines but does not qualify under HAMP or does not want to be modified, HAFA may be an option.
the homeowners do not successfully complete the trial period for their modification
The trial period initially appeared to be 3 months, although some banks have dragged out this "trial period" for over a year. During this time, a homeowner may become disheartened and give up on his or her mortgage payments. If this is the case, the bank may consider helping the delinquent homeowner move out of the house with $3,000 in relocation assistance.
the homeowners miss at least two consecutive payments during their modification period
As mentioned in item 2 above, some homeowners become frustrated with the perceived apathy of the lender or become unemployed are unable to make their mortgage payments for 2 consecutive months, which may likely disqualify them from HAMP. The servicers may take advantage of these missed payments by suggesting that the homeowners short sale or offer deeds in lieu of foreclosure to avoid the foreclosure proceedings.
the homeowners specifically request a short sale or deed-in-lieu of foreclosure
Some homeowners may decide that it is in their best interest to simply walk away from a home they are upside down in, and think that they will be better off financially, emotionally, or other ways rather than deal with a less-than-helpful servicer who continually requests for the same items to continually be re-sent over a period extending over several months.
Additional resources provided by the author
To gain more information about HAFA, visit the Making Home Affordable website or call an attorney practicing in real estate law. The attorneys at PEARSON & BUTLER, offer free legal consultations to Utah homeowners who are struggling to make their house payments. Call a foreclosure attorney today to find out what legal options may be available.