Government Help for Homeowners Facing Foreclosure
The U.S. Department of Housing and Urban Development, or HUD, the U.S Department of Treasury and local governments are working together to provide homeowners facing foreclosure with alternative options. Many of the federal and state programs can be combined to provided added benefit to homeowners who have lost their jobs or fallen behind on their mortgage payments. They will have to work in cooperation with their lenders to take advantage of these government programs.
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Making Home Affordable Program
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The Making Home Affordable program offers several options for homeowners with Fannie Mae- and Freddie Mac-insured loans. A homeowner can apply to obtain a modification for his mortgage to make it more affordable. FHA-insured loans are also eligible for the loan modification program. Other options that help homeowners avoid foreclosure include a refinancing program, and also a program that helps homeowners sell their home even if the property has negative equity. Homeowners who have been laid off can request to have a forbearance on their mortgage payments. Their payments will be temporarily suspended or reduced while they search for employment.
Local Solutions
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The Hardest Hit Fund has allocated money to states that had the most foreclosure actions during the housing market crisis. Local state housing finance agencies administer funding to qualified homeowners facing foreclosure who can demonstrate financial hardship. These programs can provide principal reduction, financial aid to homeowners who have become unemployed and transition assistance to homeowners who need to secure new housing. Funding for the Emergency Homeowners Loan Program, or EHLP, was provided to states that did not receive Hardest Hit funds. This program provides a deferred $50,000 loan to qualified homeowners who have recently become unemployed. The homeowner must demonstrate good payment history prior to the decrease in income to obtain assistance.
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Military Housing Assistance Program
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The Army Corps of Engineers has set aside $550 million to fund the Housing Assistance Program for military families. Active duty service members are eligible to receive assistance payments if they have been ordered to relocate and must sell a home as a result. If the property was purchased prior to June 30, 2006, and the property has experienced a 10 percent decrease in value, the service member may be eligible for a reimbursement.
Housing Counselor
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A HUD-approved counselor can help distressed homeowners create a financial plan that best suits their situation. Counselors can also act on behalf of the homeowner and speak with the mortgage servicer about obtaining a loan modification or forbearance. Counselors educate homeowners on how to avoid pitfalls when obtaining a home loan in the future. Foreclosure prevention counseling is provided at no cost to distressed homeowners.
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References
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