- Personal Finance
Prevent Foreclosure: Changes to Making Homes Affordable Program That May Help More Homeowners Avoid Foreclosure
In March 2010, the Obama Administration made some changes to its “prevent foreclosure program” that are designed to help more homeowners facing foreclosure. Following are these changes.
Help for Unemployed Homeowners Facing Foreclosures: The new guidelines call for lenders to reduction in mortgage payments for a period of up to six months. The aim is to give those looking for work more time to find jobs.
Help for Underwater Homeowners: Being underwater on your home simply means to owe more on it that it’s worth. And, this is a huge problem for many homeowners, because it prevents them from refinancing or modifying their home loan.
Hence, this is a welcome change to the government’s prevent foreclosure program for many. Following are the details of it.
FHA: This is an FHA refinance option that is aimed primarily at non-FHA borrowers. What it does is encourage lenders to write down principal balances by refinancing home loans and bringing them into the FHA fold.
It’s worth pointing out that that this is a voluntary measure, which means it one of the major criticisms of the Making Homes Affordable program. Many lenders have, in fact, have outright balked at writing down principal balances. They much prefer the home loan modification route.
This is one of the leading reasons housing experts say that more homeowners haven’t had their mortgages permanently restructured under the Making Homes Affordable program.
One Big Barrier to More Homeowners Getting Help from the Government’s Prevent Foreclosure Programs
Perhaps one of the biggest stumbling blocks in the government’s Making Homes Affordable program is getting a fundamental grasp of exactly what help is available to them. For example, many homeowners simply don’t know that there are two kinds of help that can assist them in stopping foreclosure.
The 2 Kinds of Help the Government Offers That Can Stop Foreclosure
Under the Making Homes Affordable program, you can (i) modify your home loan, or (ii) refinance your home loan.
I. Home Loan Modification Help: HAMP is the acronym for Home Affordable Modification Program. It helps homeowners meet eligibility requirements to avoid foreclosure by modifying their existing home loans to a more affordable level.
Your home loan does NOT need to be an FHA loan.
II. Refinance Your Home Loan: HARP is the acronym for Home Affordable RefinanceProgram: This program helps homeowners refinance their home loans. Unlike in HAMP, to qualify for HARP help, your home loan must be an FHA loan (eg, Fannie Mae or Freddie Mac-backed loan).
Find out more about the government’s prevent foreclosure program, eg, how to find out if your home loan is an FHA loan, the PMI requirement, tips for getting through the home loan modification or home loan refinance process.