HAMP Program Changes: If You’re Unemployed and/or Underwater On Your Home, Get Gov’t Help to Refinance or Modify Your Mortgage

April 30, 2010 | By Y. Black, Site Editor In Foreclosure News |

The Obama Administration’s Making Homes Affordable program was initially slated to help 3-4 million homeowners prevent foreclosure. This could be accomplished either by refinancing the loan or by a home loan modification.

How Many Homeowners Facing Foreclosure Has the Government’s Prevent Foreclosure Program (HAMP) Helped?

To date, according to the April 2010 Washington Post article, [Treasury Secretary] Geithner tells panel that more has to be done to help homeowners avoid foreclosure, the program has helped about 200,000 borrowers get permanent home loan modifications.

How Many Homeowners Facing Foreclosure Has the Government’s Prevent Foreclosure Program (HARP) Helped?

According to the January 2010 New York Times article, Treasury Weighs Fixes to Foreclosures Program:

When President Obama outlined the [Making Homes Affordable] program nearly a year ago, he said it would prevent three million to four million foreclosures by 2012. As of December [2009], mortgage companies had modified 759,000 loans on a trial basis, typically lasting three to five months.

making-homes-affordable-program

Changes to HAMP That May Help Many More Homeowners Avoid Foreclosure

On March 25, the Obama Administration made some changes to HAMP designed to help more struggling homeowners avoid foreclosures. The changes are as follows:

Help for the Unemployed: Reduction in mortgage payments for 3-6 months while seeking new employment (guidelines apply).

Help for Underwater Homeowners: This is an FHA refinance option that is aimed primarily at non-FHA borrowers. It encourages lenders to refinance loans into FHA-insured mortgages by encouraging them to write down principal balances.

It’s worth noting that this has been one of the major criticisms of the Making Homes Affordable program because this measure is voluntary. Lenders don’t have to write down principal balances. In fact, many have outright balked at doing so, preferring instead to go the home loan modification route — of which many are temporary, not permanent.

This is one of the main reasons, homeowner advocates say, more loans haven’t been permanently restructured under the Making Homes Affordable program.

The cost of these changes is made possible via $50 of TARP funds (aka the Trouble Asset Relief Programs) that were allocated for housing.

One Big Barrier to More Homeowners Getting Help from the Government’s Prevent Foreclosure Programs

Perhaps one of the biggest stumbling blocks to many homeowners getting help is understanding exactly what type of help is available. For example, many homeowners may not know that under the government’s Making Homes Affordable (MHA) program there are two kinds of help: (i) HAMP; and (ii) HARP.

HAMP is the Home Affordable Modification Program: It is designed to help homeowners meet eligibility requirements to avoid foreclosure by modifying their existing home loans to a more affordable level. Your home does not have to be an FHA loan, like in HARP (discussed below).

See if you qualify for a home loan modification under HAMP.

HARP is the Home Affordable Refinance Program: The goal of this program is to help homeowners refinance their home loans. To be eligible for HARP help, your home loan must be a Fannie Mae or Freddie Mac-backed loan (ie, an FHA loan), among other qualifications.

One of the biggest hurdles many homeowners face when trying to modify or refinance their mortgage is finding out if their home loan is an FHA loan.

How to Find Out If Your Home Loan is an FHA Loan

You can find out if your home loan is an FHA loan (ie, backed by Fannie May) by conducting a Fannie Mae’s Mortgage Lookup Search. Fannie Mae is the larger of the two agencies, so it makes sense to start your search here. If you’re not comfortable using the internet, you can call Fannie Mae at 1-800-7FANNIE (8am to 8pm EST).

You can find out if your home loan is an FHA loan (ie, backed by Freddie Mac) by conducting a Freddie Mac Mortgage Lookup Search. Note: You will have to provide your social security number. You can also call their offices toll-free between 8 am and 8 pm EST. It’s 1-800-FREDDIE (8am to 8pm EST) .

See if you qualify for a home loan modification under HARP.

Points of Interest about HARP

The PMI Requirement: Some lenders won’t qualify you under HARP if you currently have PMI (Private Mortgage Insurance). Some will though and many are changing their qualification guidelines to allow this.

No Explanation Required: Some homeowners have reported that even though they met all qualifying guidelines, they still were not approved by Fannie and/or Freddie. Why? This is the kicker – no explanation was given.

The Bottom Line on Getting Help from HAMP or HARP

Patience is the name of the game. Many homeowners trying to prevent foreclosure report that the process is long – in some cases 6 to 9 months to get their home loans modified and/or refinanced. You may go through a few different people and get a few different answers.

Tips for Getting Through the Home Loan Modification or Home Loan Refinancing Process

Maintain your cool;

Make several copies of all documents (never send in your originals);

Maintain copious notes of who you spoke with, when, at what institution, what they said;

Follow up (after a suitable amount of time, if they haven’t called you, call them);

Try, try again (if something doesn’t sound right or make sense, keep asking);

Get funds together (make sure you have enough to cover closing costs, appraisals and any other expenses you incur in the process).

Ask questions (if you don’t understand something, ask questions until you do).

Good luck! Remember, the price of all of your patience can be a significantly lower monthly payment on your mortgage. And oh yeah, the biggest payoff — you get to keep your home.

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