When it comes to the Home Affordable Foreclosures Alternative (HAFA) Program I have to admit, it seems to me the government is getting it right with this program.
THE HAFA PROGRAM: The Home Affordable Foreclosure Alternatives Program provides financial incentives to loan servicers as well as borrowers who do a short-sale or a deed-in-lieu to avoid foreclosure on an eligible loan under HAMP. Both of these foreclosure alternatives help for homeowners with the lender out by avoiding the potentially lengthy and expensive foreclosure proceedings and also by protecting the property by minimizing the time it is vacant and subject to vandalism and deterioration. These options help out the borrower by avoiding the foreclosure process and the uncertainty that comes with it and allows the borrower to negotiate when they will give up possession of their home as well as, under the HAFA program be released from any further liability from the loan including short-fall and deficiencies.

Nothing in life is ever guaranteed. You purchased your home with every intention of living in it for years, possibly forever. Things happen – divorce, death, loss of income, things beyond your control. Suddenly you find that you can no longer afford your mortgage. You may have completely drained your savings trying to keep up, but still you are under water. Is there any solution besides walking away from your home?

Keep your house and your property in good condition and repair and cooperate with your broker to show it to potential buyers. You may be required to continue to make full or partial mortgage payments (this will be determined by your lender). You must be able to provide the buyer of your home with clear title. To start, determine if you have other loans, judgments or liens secured by your home, such as a home-equity line of credit or a second mortgage. If there are such liens, you will need to either pay these loans off in full or negotiate with the lien holders to release them before the closing date. Under this program, you must make sure other lien holders will agree not to pursue other legal action related to the pay off of their lien, such as a deficiency judgment. You can get help from your broker to negotiate with the other lien holders. The program allows up to 6% of the unpaid principal balance of each loan (not to exceed an aggregate of $6,000 for all the loans in total) to be paid from the sale proceeds to help get a lien release. At several stages of the short sale process, such as after an offer is received, you will need to complete some paperwork. You are responsible for returning all documents within the time allowed in your short sale agreement with your lender.

Rate-Term VA Refinance Mortgage
A rate-term VA refinance mortgage allows homeowners to refinance up to 100% of their home's value and take advantage of all the benefits that this program has to offer. With a VA loan, the homeowner will never be required to pay monthly mortgage insurance and will have access to low, fixed rates. This type of VA refinance mortgage can significantly lower monthly payments without high out-of-pocket expenses.

If by the termination date of your short-sale agreement with your lender you have not been able to sell your home, but you have complied with all of your responsibilities under the agreement, then you will be given the opportunity to convey (transfer) ownership of your home to the lender. While this will not allow you to keep your home it will prevent you from going through a foreclosure and will release you from all responsibility to repay the mortgage debt. Additionally, you will still be eligible to receive $3,000 to help with your moving expenses.

Learn more about Obama Mortgage Relief Plan Qualifications.