HAMP vs. HAFA

With the downturn in the economy over the past two years, a number of programs have been instituted by the Federal government that are intended to help individuals who are facing foreclosure and loss of their homes. Many of these programs promise the possibility of keeping your home through modification of your mortgage.  Two such programs, the Home Affordable Modification Program or HAMP, and the Home Affordable Foreclosure Alternative program, or HAFA, have come to the forefront.  There are some similarities in the HAMP and the HAFA program, but there are also some important differences.  So, what are the differences between HAMP and HAFA and how can these important programs help individuals who are facing the loss of their homes?

Understanding HAMP and HAFA

• The HAFA program is intended to provide incentives to homeowners who take a short sale or offer a deed in lieu of foreclosure (essentially, sending their deed back to the mortgage company and giving up on their home ownership) as a method of avoiding the foreclosure process. 

HAFA offers a number of different cash incentives, such as $3000 in homeowner relocation funds, $1500 to cover fees for financial services related to home sales, and $2000 to investors to allow some of the funds from the short sale to be redistributed to alternate lienholders, so that people will consider taking the option of getting rid of their house prior to having it foreclosed.

• The HAMP program is intended as a way to allow people who are having trouble paying their mortgages to stay in their home. 

This is accomplished through a variety of loan modification options, such as lowering the interest rates, temporarily lowering the monthly payment and tacking the difference in payments on to the end of the loan, or increasing the term of the loan for up to ten years past the original thirty year mortgage cutoff so that individuals who are struggling can have lower payments than they did originally.

While the HAMP program was offered to individuals who were current on their mortgages, and who expected to have trouble, it was relatively unsuccessful because anyone who was already more than 60 days past due was often not considered as eligible for the program.  The HAFA program has only been in practice for about a year, so it is difficult to say whether it has been or will be more successful than HAMP at helping individuals avoid foreclosure of their homes and help them find new places to live.

Getting Help

If you are facing foreclosure, you should consult with an experienced lawyer as soon as possible. Your attorney can help you look into programs such as HAMP and HAFA as well as any other programs or options that might help you to save your home.