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Alphabet Soup Of Mortgage Modification Programs
Confused by the alphabet soup of all the mortgage modification programs out there? Knowing the difference between HAMP and HARP and whether you should inquire about HAFA, Alt Mod, Mod 24 or 2MP can save you time. Do you live in a HHF state? If not, maybe EHLP is a fit for you? Are they kidding with all these abbreviations?
Read on to see if you qualify for even more government assistance dollars. Today our team provides a summary of each of these programs.
HAMP: Home Affordable Modification Program If you can no longer afford to make your monthly loan payments, you may qualify for a loan modification to make your monthly mortgage payment more affordable. Millions of borrowers who are current, but having difficulty making their payments and borrowers who have already missed one or more payments may be eligible.
Strategic defaults are increasingly common as people become disillusioned with paying their mortgage while others benefit from aggressive restructuring programs. One of the requirements of HAMP is a trial period.
If borrowers make payments for three months under the trial period, their modification becomes permanent. The modified loans usually have lower interest rates or longer payment terms.
Some disturbing statistics that highlight the dismal performance of HAMP include:
1.5 Million cancelled trials as of October 2010. Trial loan modifications are cancelled due to borrower default on the new terms, failure to receive appropriate documentation or ineligibility of the borrower.
Nearly half of cancelled trial loans end up receiving a private lender modification although the long term outcome remains controversial. Lender programs have increasingly adjusted payment rates to reflect short term savings at the expense of longer term debt as fees and other expenses are added to the basis of the loan.
The backlog of delinquent mortgages in need of attention has increased.
The federal government created HAMP with an expectation of helping 3 million to 4 million homeowners. Unfortunately, the program has not come close to delivering help to that many people. As a result, HAMP is expected to be overhauled.
HARP: Home Affordable Refinance Program The federal government set up HARP to help homeowners who are current on their mortgage but who are unable to refinance their loan due the decreased property value. This program is intended to help homeowners with adjustable rate or exotic mortgages and are facing a jump in their monthly payment.
HARP will not help investor borrowers or borrowers who have no income and cannot make any mortgage payment.
Are You Eligible For HARP? There are three basic criteria to participate in HARP:
1) You must own a one to four unit home.
2) Your mortgage loan must be owned or guaranteed by Fannie Mae or Freddie Mac. You can uncover this information by visiting the making home affordable resources to verify if Fannie Mae or Freddie Mac is guarantor on your loan.
3) You must be current on your mortgage payments (no late payments reported on your credit report in past twelve months).
HAFA: Home Affordable Foreclosure Alternatives Many homeowners may feel that they can no longer afford their home, but want to avoid the negative effects of foreclosure. HAFA offers homeowners, their mortgage servicers, and investors an incentive for completing a short sale or deed-in-lieu of foreclosure.
With these options, under HAFA, a homeowner leaves their home to transition to more affordable housing and alleviate the mortgage debt they owe.
These options are available for homeowners who: 1) do not qualify for a trial mortgage modification under HAMP. 2) do not successfully complete the trial period for their HAMP modification. 3) miss at least two consecutive payments during their modification period. 4) request a short sale or deed-in-lieu of foreclosure.
Other MOD Squad Alphabet Soup In an attempt to help more homeowners avoid foreclosure, Fannie Mae and the government have created several add-on programs to HAMP including Alt Mod, Mod 24 and 2MP. Both Alt Mod and Mod 24 lower the borrower's mortgage ratio (monthly mortgage payment divided by monthly income) and consider other financial criteria to qualify applicants.
The 2MP program specifically targets borrowers with second mortgages who are in the HAMP program so that the payment on the second mortgage might also be adjusted lower.
HHF: Hardest Hit Fund The Obama Administration has put additional government dollars to work in states that have been hardest hit by property devaluations and foreclosures. The dollars are meant to help families who are ineligible for HAMP to avoid foreclosure in states such as Florida, Arizona, California, Nevada and Michigan. The program has expanded and now includes many more states.
Over $7 billion dollars have been budgeted for this program. Additional details about the housing program information can be found at financial stability information site.
EHLP: Emergency Homeowners Loan Program This program will complement the HHF by providing assistance to homeowners in hard hit local areas that may not be included in the hardest hit target states.
The program will offer zero percent interest, non-recourse, subordinate loans for up to $50,000 to assist eligible borrowers with payments on their mortgage principal, interest, mortgage insurance, taxes, and hazard insurance for up to 24 months.
To be eligible for EHLP, homeowners must:
must be at least three months behind in their payments and have a reasonable likelihood of being able to resume repayment of their mortgage payments and related housing expenses within 24 months. must be using the property as their principal residence, and eligible borrowers may not own a second home. must demonstrate a good payment record prior to the event that produced the reduction of income.
Author Resource:-
Nathan Randall, editor, Daily Dollar Newsletter provides free daily advice on money matters plus coupons and discount codes. FYI...you can now access the Daily Dollar Newsletter via iTunes podcast, YouTube video, and on Facebook and Twitter too.
While you purchase a home, you'll probably be making most significant purchases in your lifetime. Because buy a home is such a significant financial endeavor, you will have to keep in mind essential factors that go into shopping for a new home.
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