North American Foreclosure Help
The U.S. has the most comprehensive foreclosure relief program in North America that helps homeowners make their mortgage payment more affordable. Federal programs are for homeowners across the country. Certain states that were hard-hit by the foreclosure crisis have been awarded additional funding. These programs are administered through local housing finance agencies. To determine if you qualify for help, call the national HOPE hotline at 888-995-HOPE to connect with a housing counselor.
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Loan Modification
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The Home Affordable Modification Program, or HAMP, helps homeowners obtain a more affordable mortgage payment. To qualify for help, the homeowner must be able to demonstrate a financial hardship and the unpaid principal balance of their loan cannot exceed $729,750 for a single-family home. The new mortgage payment will be 31 percent of the household's total income. This loan modification does not reduce the amount of debt owed but only restructures the loan with a lower interest rate and extended term.
Refinance Options
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The Home Affordable Refinance Program, or HARP, helps homeowners who are current on their mortgage payment obtain a lower interest rate and more stable loan product. To qualify for help, the mortgage must be insured through Freddie Mac or Fannie Mae. The balance on the mortgage can be up 125 percent of the property value to get it refinanced through HARP. This program is available until June 10, 2011. The FHA Short Refinance Program is another option under the Making Home Affordable umbrella of programs. Homeowner obtain a lower interest rate and the unpaid principal balance is also reduced. The mortgage servicer must agree to participate in this program for the homeowner to qualify for help.
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Short Sale Programs
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A short sale refers to a property with a value less than what is owed on the mortgage that has been put on the market. Since the homeowner owes money on the home and the sales price does not cover the debt, he must obtain approval from the bank to sell the home. The Home Affordable Foreclosure Alternatives, or HAFA, provides incentives to the bank to approve the sale. Homeowners with Federal Housing Administration, or FHA, insured loans can get similar help through the Preforeclosure Sales Program. Although the homeowner cannot stay in his home, he will prevent from getting a foreclosure record on his credit history.
Direct Aid
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A few programs offer direct financial aid to distressed homeowners. The Emergency Homeowner's Loan Program provides a declining balance loan up to $50,000 to help with the mortgage payment and any payments in arrears. After the first five years, the emergency loan balance will decline 20 percent on an annual basis. The Hardest Hit fund provides a mortgage payment subsidy to homeowners who have lost their job or experienced a drop in income. To qualify for help, the homeowner must be low-to-moderate income.
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References
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