Avoiding Foreclosure (Part 1)
There are 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 the U.S. Department of Housing and Urban Development (HUD). This article provides a summary of these various programs. Please continue reading in order to determine which program can best assist you.
Making Home Affordable
The Making Home Affordable (MHA) Program is a 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. For those homeowners for whom homeownership is no longer affordable or desirable, the program can provide a way out that avoids foreclosure. Additionally, in an effort to be responsive to the needs of today's homeowners, there are options for unemployed homeowners and homeowners 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% of your verified monthly gross (pre-tax) income to make your payments more affordable. The typical HAMP modification results in a 40% drop in a monthly mortgage payment. Eighteen percent of HAMP homeowners reduce their payments by $1,000 or more.
Second Lien Modification Program (2MP)
If your first mortgage was permanently modified under HAMP 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, home equity line of credit (HELOC), or some other second lien that is making it difficult for you to keep up with your mortgage payments, learn more about this MHA program.
"Underwater" Mortgages
In today's housing market, many homeowners 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)
PRA was designed to help homeowners whose homes are worth significantly less than they owe by encouraging servicers and investors to reduce the amount the homeowner owes on the home.
Treasury/Federal Housing Administration (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.
U.S. Department of Housing and Urban Development (HUD). (n.d.). Avoiding foreclosure. Retrieved November 1, 2018, from https://www.hud.gov/