President Obama’s Home Affordable Foreclosure Alternative (HAFA) program has been under intense fire this week.

As DSNews.com reported, four appraisal organizations sent a letter to Treasury Secretary Timothy Geithner on Monday, opposing the program’s allowance of broker price opinions (BPOs). However, appraisers aren’t the only ones with concerns about HAFA.

On Thursday, the chief foreclosure expert at Ushud.com and its parent company Heavy Hammer Inc. warned that this new program is “rife with problems that will adversely impact real estate professionals and consumers alike.”

Michael Urbanski, CEO of Annapolis, Maryland-based Heavy Hammer Inc. and Ushud.com, said the administration’s “unprecedented scheme” will encourage homeowners to abandon mortgage contracts. He believes HAFA rewards financial irresponsibly by eliminating the traditional consequences associated with defaulting on your mortgage.

Under the plan, homeowners will receive a $1,500 relocation allowance, and their credit scores will remain unaffected. In addition, lenders will rely on real estate agents to provide appraisals of distressed properties rather than employ certified appraisers, opening the door to fraud and abuse. This risk of fraud associated with BPOs was echoed in the concerns voiced earlier this week by the appraisal organizations.

“The administration’s approach with this program is completely wrongheaded,” Urbanski said. “While some principal forgiveness for upside down homeowners may be useful, this program will encourage homeowners on the fence to give up on homeownership and turn a handful of real estate investors into real estate barons. The real estate crisis, and by extension the crippled economy, will be further damaged as a result.”

According to Urbanski, many lending institutions are already ill-equipped to manage the current volume of short sale transaction requests, and an anticipated influx of new request will further overwhelm an already bogged-down system. This, he says, will inadvertently create a higher number of foreclosures.

Urbanski explained that institutions make much greater profits from short sales and foreclosures compared to loan modifications. Although banks are in the business of making money, he said they should be motivated to do so through policies that do not create a new class of homeless people while also imploding the value of real estate.

“We are encouraged by the administration’s willingness to help,” Urbanski said. “However, efforts should concentrate on making existing programs more effective, even if the banks make less, rather than a new plan that will harm real estate professionals and loan servicers and lead to a decline in homeownership and property values.”