AVOIDING FORECLOSURE

The Obama Administration has implemented a number of programs to assist homeowners who are at risk of foreclosure and otherwise struggling with their monthly mortgage payments. The majority of these programs are administered through the U.S. Treasury Department and HUD. This page provides a summary of these various programs. Distressed home owners are encouraged to contact their lenders and loan servicers directly to inquire about foreclosure prevention options that are available.




MAKING HOME AFFORDABLE PROGRAM

The Making Home Affordable© (MHA) Program is a critical part of the Obama Administration's broad strategy to help homeowners avoid foreclosure, stabilize the country's housing market, and improve the nation's economy.

Homeowners can lower their monthly mortgage payments and get into more stable loans at today's low rates. And for those home owners for whom home ownership is no longer affordable or desirable, the program can provide a way out which avoids foreclosure. Additionally, in an effort to be responsive to the needs of today's home owners, there are also options for unemployed home owners and home owners who owe more than their homes are worth. Please read the following program summaries to determine which program options may be best suited for your particular circumstances.


MODIFY OR REFINANCE YOUR LOAN FOR LOWER PAYMENTS

  • Home Affordable Modification Program (HAMP): HAMP lowers your monthly mortgage payment to 31 percent of your verified monthly gross (pre-tax) income to make your payments more affordable. The typical HAMP modification results in a 40 percent drop in a monthly mortgage payment. Eighteen percent of HAMP homeowners reduce their payments by $1,000 or more.

  • Principal Reduction Alternative (PRA): PRA was designed to help homeowners whose homes are worth significantly less than they owe by encouraging servicers and investors to reduce the amount you owe on your home.

  • Second Lien Modification Program (2MP): If your first mortgage was permanently modified under HAMP SM and you have a second mortgage on the same property, you may be eligible for a modification or principal reduction on your second mortgage under 2MP. Likewise, If you have a home equity loan, HELOC, or some other second lien that is making it difficult for you to keep up with your mortgage payments, this program may help you.

  • Home Affordable Refinance Program (HARP): If you are current on your mortgage and have been unable to obtain a traditional refinance because the value of your home has declined, you may be eligible to refinance through HARP. HARP is designed to help you refinance into a new affordable, more stable mortgage.


"UNDERWATER" MORTGAGES

In today's housing market, many home owners have experienced a decrease in their home's value. Learn about these MHA programs to address this concern for homeowners.

  • Home Affordable Refinance Program (HARP): If you are current on your mortgage and have been unable to obtain a traditional refinance because the value of your home has declined, you may be eligible to refinance through HARP. HARP is designed to help you refinance into a new affordable, more stable mortgage.

  • Principal Reduction Alternative: PRA was designed to help home owners whose homes are worth significantly less than they owe by encouraging servicers and investors to reduce the amount you owe on your home.

  • Treasury/FHA Second Lien Program (FHA2LP): If you have a second mortgage and the mortgage servicer of your first mortgage agrees to participate in FHA Short Refinance, you may qualify to have your second mortgage on the same home reduced or eliminated through FHA2LP.

If the servicer of your second mortgage agrees to participate, the total amount of your mortgage debt after the refinance cannot exceed 115% of your home's current value.


ASSISTANCE FOR UNEMPLOYED HOMEOWNERS

  • Home Affordable Unemployment Program (UP): If you are having a tough time making your mortgage payments because you are unemployed, you may be eligible for UP. UP provides a temporary reduction or suspension of mortgage payments for at least twelve months while you seek re-employment.

  • Emergency Homeowners' Loan Program (EHLP), Substantially Similar States: If you live in Connecticut, Delaware, Idaho, Maryland, or Pennsylvania,

  • FHA Forbearance for Unemployed Home Owners: Federal Housing Administration (FHA) requirements now require servicers to extend the forbearance period for unemployed home owners to 12 months. The changes to FHA's Special Forbearance Program announced in July 2011 require servicers to extend the forbearance period for FHA borrowers who qualify for the program from four months to 12 months and remove upfront hurdles to make it easier for unemployed borrowers to qualify.


MANAGED EXIT FOR BORROWERS

  • Home Affordable Foreclosure Alternatives (HAFA): If your mortgage payment is unaffordable and you are interested in transitioning to more affordable housing, you may be eligible for a short sale or deed-in-lieu of foreclosure through HAFA SM.

  • "Redemption" is a period after your home has already been sold at a foreclosure sale when you can still reclaim your home. You will need to pay the outstanding mortgage balance and all costs incurred during the foreclosure process.


FHA INSURED MORTGAGES

The Federal Housing Administration (FHA), which is a part of the U.S. Department of Housing and Urban Development (HUD), is working aggressively to halt and reverse the losses represented by foreclosure. Through its National Servicing Center (NSC), FHA offers a number of various loss mitigation programs and informational resources to assist FHA insured home owners and home equity conversion mortgage (HECM) borrowers facing financial hardship or unemployment and whose mortgage is either in default or at risk of default.


CONTACT FHA

FHA staff are available to help answer your questions and assist you to better understand your options as an FHA borrower under these loss mitigation programs. There are several ways you can contact FHA for more information, including:

  • Call the NSC at (877) 622-8525

  • Call the FHA Outreach Center at 1-800-CALL FHA (800-225-5342)

  • Persons with hearing or speech impairments may access this number via TTY by calling the Federal Information Relay Service at (800) 877-8339.

  • Email the FHA Resource Center

  • The Online FHA Resource Center

 


 


© 2013 TLC Magazine Online, Inc.