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The news has not been so good for the Home Affordable Modification Program (HAMP) bailout program. Especially as regards the canceled trial modifications bypassing permanent conversions.

Many experts are anticipating that the Home Affordable Foreclosure Alternatives (HAFA) program just may be more effective in keeping homeowners out of foreclosure.

Of course, with this program, the homeowner will ultimately have to leave their home.  But as you will recall, HAFA was designed to give borrowers who failed to make those home loan payments an opportunity at a short sale or deed-in-lieu instead of going the foreclosure route.

However, it is worth noting that based on survey data of the eight largest HAMP participants, the United States Treasury found that nearly 45 percent of the canceled trials from HAMP are now in an alternate modification program.

It is also expected that more and more failed HAMP loan modifications will no doubt enter HAFA after falling into delinquency.

The statistics go on to say that for modifications that have been permanent for more than 180 days, approximately 6 percent have fallen into a 60-plus day delinquency once again.

But it is interesting to note that the longer a homeowner is in the HAMP program, the lower the default rate.  In fact, it is less than 2 percent at the six months following the conversion period.

In all honesty, HAMP was designed for those consumers who wanted to stay in their home.  But as prices continued to deteriorate, more homeowners started to look for a way out, either through a short sale or deed-in-lieu.

“Then comes HAFA.  In recognition of the fact that some borrowers simply could not make payments even if the payment were lower, a more dignified exit strategy was created,” said Cary Sternberg, president of Excellen REO.

Steinberg goes on to say:  “It is too early to tell what the success rate of the HAFA program will be, but I am betting it will be far better than HAMP.  HAMP is a Band-Aid, HAFA is an exit strategy.”

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This entry was posted on Monday, August 9th, 2010 at 10:02 pm and is filed under st louis mortgage news. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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