Home Affordable Foreclosure Alternative Plan

The recent upgraded Home Affordable Foreclosure Alternative Plan tenets came in prominence this year April, 2010.

The plan would cease to be in action post December 31st 2012.
The Home Affordable Foreclosure Alternative Plan is formulated and designed in order to ease out and organize the usage of the short-sales and deeds-in-lieu of foreclosure, by improvising on the entire procedure.
The principles and guidelines under the plan are controlled; but prominent banks service providers that include Chase, Bank of America, Citimortgage and Wells Fargo and other minor lenders too have given their consent to participate.

Home Affordable Foreclosure Alternative Plan – Participation Rules

All the service providers who are participating need to implement the plan in coherence with their self- written policy that is at par with the investor guidelines. The policy might include certain factors like conditions of local and regional market, acute losses that might have to be incurred, borrower co-operation and motivation, the timeline of the pending foreclosure activities and the like.

Eligible Loans

The loans that qualify and are eligible for the plan are:-
* The loans that are not guaranteed or owned by organizations like Freddie Mac or Fannie Mae.
* The present principal balance that is not cleared is usually less than or equal to $729, 750.
* The property happens to be the borrower’s prime residence or house.
* The mortgage that is default or wrong is clearly and accordingly foreseeable.
* The mortgage loan amount is the first lien mortgage that was initiated before or on 1st January 2009.
* The total mortgage payment of the borrower in a month surpasses 31 per cent of his gross earning.

Home Affordable Foreclosure Alternative Plan- Salient Features

Some of the salient features of the Home Affordable Foreclosure Alternative Plan are:-

* The service providers need to give the house owners as well as the borrowers a span of 90 days so that he can market and sell the property. The time can be extended to even a year depending on the market conditions.

* The plan makes it possible for the borrowers to receive the short term sales that are pre-approved before the property listings.

* The total amount debt that might be forgiven might be taken as income for tax concerns. This is according to the Mortgage Forgiveness Debt Relief Act of 2007 that would cease function at the end of the year 2012. The forgiven debt is not going to be taxed if the sum total of the forgiven debt does not surpass the debt that was used in order to construct, renovate or procure the main residence.

* The plan stops the service providers from making a reduction in the real estate incentive or commission decided on the listing agreement, which approximately is up to 6 per cent.

* The deals should preferably be at “arms length”. As per the plan the borrowers are not allowed to sell or list the property to any of the relative, or any one with whom he might share a personal and close association.

* The plan also propagates that the borrowers here by need to be totally free from future accountability of their first mortgage debt. In case the lien holder gets a commission under the Home Affordable Foreclosure Alternative Plan. The debt is allowed.

* The buyers might not be able to recover the property holding within a period of 90 days post the closing.

The plan makes it imperative for the usage of standard documentations, processes, deadlines as well as timelines. A comprehensive request to approve a Short Sale form needs to be sent to the lender within three working days post receiving an offer. The Home Affordable Foreclosure Alternative Plan propagates that there is any property holding that is not sold off by the completion of the term of the Short Sale Plan; the borrower has the access and right to convey the property title to the Lender by Deed in Lieu of Foreclosure. This will protect the individual buyer from experiencing a foreclosure sale. At the same time it frees him from the liability of repaying back the mortgage debt. In addition to that the borrower is going to get an amount of $3,000 that will assist him in his expenses.