Government Mortgage Relief Programs

In an attempt to slow foreclosures, the Obama Administration rolled out a number of mortgage relief programs.  Millions of homeowners are upside down and owe considerably more than their homes are worth. The “creative” financing programs have disappeared and negative equity makes refinancing impossible. Those in distress either need assistance with a modification of their current loan(s) may have options if they can qualify for one of the government’s assistance programs.

The Making Home Affordable initiative (www.MakingHomeAffordable.gov) is an umbrella solution to mortgage relief.  The program was announced in February 2009 and many lenders were slow to participate in a two-prong approach to mortgage relief—the Home Affordable Refinance Program (HARP) and the Home Affordable Modification Program (HAMP).   It’s taken some time, but lenders and servicers are beginning to participate en masse at the behest (mandate?) of the Feds.  According to a recent press release from Making Home Affordable (MHA), servicers covering 85 percent of loans in the US are modifying loans under the program.  The federal goal is to assist 3-4 million homeowners in the next 3 years.   Simply put, if homeowners can prove income and assets, they can either refinance under the Home Affordable Refinance Program (HARP) or qualify for a loan modification under the Home Affordable Modification Program (HAMP).

Here’s a quick look at each government program designed to give mortgage relief:

HARP – Home Affordable Refinance Program
Many homeowners pay their mortgages on time but are not able to refinance to take advantage of today’s lower mortgage rates perhaps due to a decrease in the value of their home. A Home Affordable Refinance will help borrowers whose loans are held by Fannie Mae or Freddie Mac refinance into a more affordable mortgage.

You may be eligible if: 

Both Fannie Mae and Freddie Mac have established toll-free telephone numbers and web submission processes to make this data available.  Borrowers can enter information to determine if either agency owns or guaranteed the loan.  This information is not a guarantee of eligibility for a refinance under HARP, as other qualifying criteria must also be met.  

Fannie Mae

Freddie Mac 

HAMP-Home Affordable Modification Program
Many homeowners are struggling to make their monthly mortgage payments perhaps because their interest rate has increased or they have less income. A Home Affordable Modification will provide them with mortgage payments they can afford.

To apply for a modification under HAMP, you must:

— Have a first lien mortgage that was originated on or before January 1, 2009;
— Have a monthly mortgage payment (including taxes, insurance, and home owners association dues) greater than 31 percent of your monthly gross (pre-tax) income; and
— Have a mortgage payment that is not affordable due to a financial hardship that can be documented.