WASHINGTON (5/15/09)--Several incentives have been added for short sales and home price declines under President Barack Obama’s Making Home Affordable (MHA) program. The program, announced in February, aims to stabilize the housing market and offer assistance to seven to nine million homeowners by reducing house payments to affordable levels and preventing avoidable foreclosures. Short sales incentives include:
* Up to $1,000 for successful completion of a short sale or deeds-in-lieu (DIL); * Up to $1,500 for borrowers to help with relocation; and * A shared cost with Treasury for junior lien holders to release their claims--matching $1 for every $2 paid by investors--up to $1,000.
A lender may consider a short sale--or if that is unsuccessful, a DIL--when a borrower meets eligibility requirements for a Home Affordable Modification but not for a modification or cannot maintain payments during the modification trial period. Each successful modification for a home price decline also will be eligible for a Home Price Decline Protection (HPDP) incentive. MHA will pay up to $10 billion to encourage lenders to modify rather than foreclose. Payments will be based on the number of modified loans that successfully complete the modification trial period and remain in the program. If a trial modification remains successful, 1/24th of the HPDP incentive will accrue to the lender/investor each month for up to two years. Incentive payments will be made at the end of the first and second year of modification. Between loans covered by servicers or those securitized by Fannie Mae or Freddie Mac, more than 75% of all loans nationwide are covered by MHA. For more information, use the links.