Though the rescission has ended, it has been found that the situation in the real estate market has not improved much. It has been noticed that home values have dropped so low that the loan amount is more than the price of the property. Around 11.2 million homes which are underwater and 2.3 million homes are close to slipping underwater. California, Nevada, Arizona and Florida are some of the worst affected states.

Underwater or sunk cost mortgages are more stressful to those who are unemployed. It has to be noted here that unemployment has increased by 10% compared to the last year. No equity and loss of job has disqualified most of the borrowers from receiving refinance or loan modification. Thus, most of the borrowers are on the verge of losing their homes in foreclosure.

However, the Obama administration is coming up with various mortgage assistance programs to help borrowers who are underwater. Let’s take a look at some of the option:

• $112M mortgage assistance to New Jersey: A few days back, the Obama administration had given $112 million to New Jersey as mortgage assistance. The money will be used by the state in order to design a program which will help the unemployed homeowners stay in their homes while searching for work.

• $3 billion assistance for jobless homeowners: Apart from $112M assistance to New Jersey, the Obama administration has also offered $3 billion to those homeowners who are suffering due to unemployment and are unable to pay their mortgage payments. Unemployed people of around 17 states will receive help from this assistance. Homeowners who are at the risk of foreclosure would get interest-free loans save their property.

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With the introduction of the Home Affordable Foreclosure Alternatives Program (HAFA) on April 5th, new rules and guidelines have come up for the lenders. This new program is an extension of the HAMP (Home Affordable Modification Program) and will in turn help the borrowers further in safeguarding their property against foreclosures.

Let’s take a look at some of the specifics of the HAFA program:

1. Hardship information - The financial hardship information provided by the borrower under HAMP will be taken into account while considering him/her for this program.
2. Pre-approved short sale terms - Under this program, the borrowers will receive pre-approved short sale terms. They would receive these terms and conditions prior to their listing of the property with a real estate agent.
3. Future liability - The borrowers will be released from the future liability in regards to the loan. The lender will not be able to come after the borrower for any kind of deficiency judgment or cash contribution.
4. Financial incentives - The HAFA program provides financial incentives for servicers to cover administrative and processing needs. It also offers financial incentives including $3,000 for borrower relocation assistance.
5. Participating servicers - All the servicers participating in HAMP to will have to implement HAFA in accordance with their own written policy. However, the guidelines should be consistent with investor guidelines
6. Tenure of the program - The HAFA program comes to an end on December. 31st, 2010.

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