foreclosure.
HAFA improves the process by requiring servicers to inform borrowers, before they list the property, of the approved list price or acceptable sales proceeds (expressed as the net amount after subtracting allowable closing costs and any other costs). Further, HAFA requires borrowers to be fully released from future liability by the lender and any mortgage insurer for all mortgage debt. Neither deficiency judgment nor cash contribution or promissory note is allowed. Mortgage insurers and lenders cannot require contributions from the borrower or real estate agent as a condition to release liens or release borrowers from personal liability. HAFA also provides financial incentives. This includes $3,000 for borrower or tenant relocation assistance, $1,500 for servicers to cover administrative and processing costs (GSEs pay $2,200) and up to a $2,000 match for mortgage investors to allow up to $8,500 in short sale proceeds to be distributed to subordinate lien holders (on a one-for-three matching basis). The $8,500 cap does not apply to non-mortgage lien holders, such as mechanics’ liens or homeowner association assessment liens.
FEDERAL HOUSING ADMINISTRATION REFINANCING
A Federal Housing Administration (FHA) loan is a mortgage insured by the FHA, an agency within the HUD. Borrowers with FHA loans pay for mortgage insurance, which protects the lender from a loss if the borrower defaults on the loan. Because of that insurance, lenders can offer FHA loans at attractive interest rates and with less stringent and more flexible qualification requirements. Refinancing may be made available for a homeowner with a mortgage that’s more than what the home is worth
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