The federal government has launched a number of programs to help homeowners faced with the threat of foreclosure.
The nation’s housing crisis beginning in 2007, generated an unprecedented number of home foreclosures across the country. One of the few silver linings to this huge dark cloud was the creation of a number of federal programs aimed at assisting homeowners to avoid losing their homes to foreclosure. If you are facing the challenge of avoiding home foreclosure, one or more of these federal programs may be able to assist you.
Home Affordable Modification Program (HAMP)
The Home Affordable Modification Program (HAMP) was the most notable federal response to the most recent foreclosure crisis. The program was designed to help reduce the monthly mortgage payment of eligible homeowners by deferring part of the principle mortgage. Under HAMP, homeowners are responsible for paying the deferred portion only after the principal has been paid off.
To apply for this program be prepared to provide:
Your monthly mortgage statement- Information about any other mortgages on your home or other property
- For salaried employees or hourly wage earners, 2 recent pay stubs (not more than 90 days old) that reflect year-to-date income
- For self-employed homeowners, your most recent signed and dated quarterly or year-to-date profit and loss statement
- Documentation of additional income received from other sources (tips, commissions, bonuses, housing allowances, overtime, etc.)
- Documentation of any benefits received (Social Security, disability, death benefits, pension, public assistance, or adoption assistance, etc.)
- Documentation of any other income you want considered (alimony, child support, separation maintenance payments, etc.)
- Two most recent bank statements
- A utility bill showing your name and property address
- Unemployment benefits letter, if applicable
- Information about your savings and other assets
- Your two most recent federal tax return with all schedules, including Schedule E
- It may also be helpful to prepare a letter describing the circumstances causing your hardship
If you are a homeowner who falls into any of these criteria, you may be eligible for a modification. (For more information regarding HAMP, click here .)
Home Affordable Refinance Program (HARP)
Some homeowners are unable to refinance due to depreciated home values in the current economy. The HARP program helps affected homeowners secure refinancing for a more manageable mortgage payment.
If you're not behind on your mortgage payments but have been unable to get traditional refinancing because the value of your home has declined, you may be eligible to refinance through HARP. HARP was designed to help you get a new, more affordable, more stable mortgage. HARP refinance loans require a loan application and underwriting process, and refinance fees will apply.
You may be eligible for HARP if you meet the following criteria:
- You are current on your mortgage , with no 30-day+ late payments in the last six months and no more than one in the past 12 months
- Your home is your primary residence , a 1-unit second home or a 1- to 4-unit investment property .
- Your loan is owned by Freddie Mac or Fannie Mae .
- Your loan was originated on or before May 31, 2009 .
- Your current loan-to-value (LTV) ratio must be greater than 80% .
(For more information regarding HARP, click here .)
Home Affordable Foreclosure Alternatives (HAFA)
In some cases, a homeowner's mortgage is simply unmanageable. If you fall into this category and would prefer to move to a home that is more affordable without foreclosing on your current home, this program may be able to help.
HAFA provides two options for transitioning out of your mortgage: a short sale or a Deed-in-Lieu (DIL) of foreclosure. In a short sale, the mortgage company lets you sell your house for an amount that falls "short" of the amount you still owe. In a DIL, the mortgage company lets you give the title back, transferring ownership back to them.
With either option, HAFA offers benefits that make the transition as favorable as possible:
- Through HAFA, you can get help with your primary residence or rental property.
- If a HAFA short sale doesn’t work, you may be able to give the title back to your mortgage company in a HAFA deed-in-lieu of foreclosure (DIL).
- Once you complete a HAFA short sale or DIL, there is a waiver of deficiency, meaning you are released from any remaining mortgage debt.
- HAFA offers $10,000 in relocation assistance for you or your tenant.
- In some cases, HAFA has a less negative effect on your credit score than a foreclosure, which allows for a faster financial recovery.
You may be eligible for HAFA if you meet all of the following criteria:
- You are struggling to make your mortgage payments due to financial hardship.
- You are delinquent or in danger of falling behind on your mortgage.
- You obtained your mortgage on or before January 1, 2009.
- Your property has not been condemned.
- You owe up to $729,750 on your primary residence or one-to-four unit rental property (loan limits are higher for two- to four-unit properties).
(For more information regarding HAFA, click here .)
Home Affordable Unemployment Program (HAUP)
If you are unemployed and, depending on your situation this program may reduce your mortgage payments to 31 percent of your income or suspend them altogether for 12 months or more. You may be eligible for HAUP if you meet all of the following criteria:
- You are struggling to make your mortgage payments due to unemployment.
- You are delinquent or in danger of falling behind on your mortgage.
- You obtained your mortgage on or before January 1, 2009.
- Your property has not been condemned.
- You owe up to $729,750 on your primary residence or one-to-four unit rental property (loan limits are higher for two- to four-unit properties).
(For more information on HAUP, click here .)
In addition to these programs, the U.S. Department of Housing and Urban Development (HUD) can be a powerful tool for homeowners who need help avoiding home foreclosure. Your local HUD office can:
- Help you find qualified mortgage counselors
- Help you find additional federal assistance for avoiding foreclosure
- Help you report foreclosure scams
- Help you find affordable housing
Veterans
If you are an active or retired service member, a survivor or a spouse of a veteran, there are a number of assistance program available for you. If the home you are trying to save from foreclosure was purchased with the use of a Veterans Administration (VA) loan, there are some specific steps that can be taken to help you avoid foreclosure. You also have expanded access to counseling and support services from qualified counselors who can direct you to all of the programs you are eligible for. Contact your local VA office to start getting the support you have earned.
(For more information on VA housing assistance and counseling services, click here .)
Each federal program has specific rules and regulations regarding the amount of assistance offered and who can qualify. Federal programs for avoiding home foreclosure can help ease the financial and emotional burden you are experiencing. RealtyNow can help by putting you in contact with real estate professionals in your area, today! To view or compare home listings in your desired area, enter a zip-code above.
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