Government Grants to Prevent Foreclosures
The U.S. housing market crashed in 2007, resulting in many homeowners losing their properties. The Obama Administration created the Making Home Affordable, or MHA, programs in 2009 to stabilize the market. Although the MHA programs aren't grants, they provide guidance and financial help for homeowners who can't afford their mortgage payments and are facing foreclosure.
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Home Affordable Modification Program (HAMP)
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If you can't afford your current mortgage payment levels, you may be able to lower your payments with the Home Affordable Modification Program (HAMP). This program reduces your monthly mortgage payment to 31 percent of your gross income. You may have to go through a trial period of three to four months to show your ability to make prompt payments before your mortgage is permanently modified. If you have a second mortgage and qualify for HAMP, the Second Lien Modification Program may lower your second mortgage payments.
Home Affordable Refinance Program (HARP)
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If your home has dropped in value, you may not be able to refinance to take advantage of lower interest rates. In such a situation, the Home Affordable Refinance Program (HARP) helps you refinance into a more affordable mortgage. However, you have to be current on your mortgage payments and have enough income to follow the new payment schedule to qualify for HARP. Your mortgage must also be owned or guaranteed by Fannie Mae or Freddie Mac.
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Home Affordable Foreclosure Alternatives (HAFA)
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If you can't afford even lowered mortgage payments, you may have to give up your property. To minimize the damage to your credit score, the government has a Home Affordable Foreclosure Alternatives (HAFA) program. Under HAFA, you voluntarily give the property to the lender and walk away with no mortgage debt and less damaging impact on your credit score. If you qualify for HAFA, the government may provide you with $3,000 for relocating.
Unemployment Program
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The government has special programs for homeowners who can't afford their mortgage payments due to unemployment. Under the Unemployment Program, the lender agrees to a forbearance period, which is a temporary suspension or reduction of your mortgage payments. The minimum forbearance period is three months, but the lender may extend the term depending on the particular case. To be eligible for the Unemployment Program, you have to be receiving or eligible for unemployment benefits. You must also not be more than three months delinquent on your loan.
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