When the Obama Administration launched its first home loan modification program, the banks offered stiff resistance. At first, lenders did not see the merit to helping unemployed and distressed homeowners. As the months of failed workouts and increasing delinquencies began to mount, banks began to change their view of the foreclosure crisis.
Overwhelmed with the prospect REO’s and with Fannie Mae and Freddie Mac in dire straits, the government launched new loan modification programs under its Home Affordable Modification Programs (HAMP).
The problem is that the banks and the government misread the homeowners. Owning a home was no longer the American Dream. Starting afresh with a new job and putting dinner on the table replaced owning a home as the American Dream.
Since March 2009, more than 1.24 million homeowners have enrolled in HAMP plans. More than 15 million distressed owners had been offered admittance to the program. Of the 1.24 million that have tried the program more than 429,000 have already failed. Only 349,00o modifications have been approved after the trial period. Most failures are occurring during the mandatory period.
With so many failures and with many homeowners actually opting to “walk-away” from their underwater mortgages, foreclosures are occurring en masse and the pipelines are filling fast. So, the Administration has put forth a new program entitled Home Affordable Foreclosure Program.
Under the HAFA program, qualified homeowners are given pre-approved listing terms, including price and occupancy dates and are given plenty of time to properly market the home. Basically, HAFA sets the stage for a pre-approved short sale.
Investors can avoid some of the hardships associated with foreclosure auctions and some of the resistance often accompanying short sales by tracking these HAFA listings. Another advantage of HAFA properties is that all listing information is stated for the investor’s consideration. This can save the investor time and footwork. Investors are gravitating to the HAFA program because there is an absence of desperation and a feeling of cooperation with each transaction.