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The Making Home Affordable Program

The Making Home Affordable Program (MHA)® is the federal government’s strategy to help homeowners avoid foreclosure, stabilize the country’s housing market and improve the nation’s economy. Maybe your expenses have increased due to medical bills or you're picking up the pieces after a separation or divorce. Maybe you're trying to get by with less because your hours were cut or your business failed or stumbled briefly. Whatever the case may be, it is important to be proactive when you are trying to save your home. There are different lending programs within the MHA to help homeowners stay in their homes, based on their needs. Do any of the following questions fit your current situation?

By clicking on each of the links above, you can jump to information about the MHA lending programs available to meet that need. Or, simply continue through this course to learn about all the available MHA programs.

Lower Your Monthly Mortgage Payment

Through MHA mortgage modification programs, you may be able to lower your monthly mortgage payment, leading to significant savings each month. The following are home modification programs under the MHA umbrella that are designed to provide homeowners with relief in this area:

By clicking on each of the links above, you can jump to more detailed information about that particular type of MHA lending program. Or, simply continue through this course to learn more about all of the available programs.

Home Affordable Modification Program (HAMP)

If you are employed, but still struggle to make your mortgage payments, you may be eligible for the Home Affordable Modification Program, or HAMP. The eligibility requirements for this program are as follows:

  • You obtained your mortgage on or before January 1, 2009.
  • You owe up to $729,750 on your primary residence or single unit rental property.
  • You owe up to $934,200 on a two-unit rental property, $1,129,250 on a three-unit property, or $1,403,400 on a four-unit property.
  • The property has not been condemned.
  • You have a financial hardship and are either delinquent or in danger of falling behind on your mortgage payments (non-owner occupants must be delinquent in order to qualify).
  • You have sufficient, documented income to support a modified payment.
  • You must not have been convicted within 10 years of felony larceny, theft, fraud or forgery, money laundering or tax evasion, in connection with a mortgage or real estate transaction.

These eligibility guidelines are just that, guidelines. There may be some exceptions that are considered; be sure to check with your mortgage lender for more information.

HAMP - Extended Eligibility Options

Under the plan previously outlined, many homeowners did not qualify for HAMP modifications and ended up in foreclosure or some other option. Effective June 1, 2012, the program was expanded to include the following eligibility opportunities:

  • Homeowners who are applying for a modification on a home that is not their primary residence, but the property is currently rented or the homeowner intends to rent it to someone.
  • Homeowners who previously did not qualify for HAMP because their debt-to-income ratio was 31% or lower.
  • Homeowners who previously received a HAMP trial period plan, but defaulted in their trial payments.
  • Homeowners who previously received a HAMP permanent modification, but defaulted in their payments, therefore, losing good standing.

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Applying for a HAMP Modification

Applying for a HAMP modification is not a difficult process, but you will need to make sure all forms are turned in completely and accurately. The following must be provided to your financial institution (if it participates in the program) or other mortgage servicer:

It is important to point out that program enrollment ends December 31, 2013.

FHA Home Affordable Modification Program (FHA-HAMP)

The FHA offers a mortgage modification program for struggling homeowners called the FHA Home Affordable Modification Program, or FHA-HAMP. It is designed to lower monthly mortgage payments to no more than 31% of the homeowner’s verified monthly gross (pre-tax) income, making mortgage payments much more affordable.

If you have a loan that is insured or guaranteed by the Federal Housing Administration, or the FHA, you may be eligible for this special type of HAMP.

Veterans Administration Home Affordable Modification Program (VA-HAMP)

The Department of Veterans Affairs, or VA, offers a special modification program for struggling homeowners called theVeteran’s Administration Home Affordable Modification Program, or VA-HAMP. This loan modification program is designed to lower your monthly mortgage payment to 31% of your gross income (pre-tax), making mortgage payments much more affordable.

If you have a loan that is insured or guaranteed by the Department of Veterans Affairs (VA), you may be eligible for a program through that government agency.

USDA’s Special Loan Servicing

If you have a loan that is insured or guaranteed by the United States Department of Agriculture’s (USDA) Section 502 Single Family Housing Guaranteed Loan Program, you may be eligible for a program for a special loan modification program through that government agency. Similar to a the HAMP, this program is designed to lower your monthly mortgage payment to no more than 31% of your verified monthly gross (pre-tax) income.

Principal Reduction Alternative (PRA)

If your home is currently worth significantly less than you owe on it, the Principal Reduction Alternative, or PRA, may be something to consider. The PRA is designed to reduce the principal on your home, making your payments more affordable and in line with your area. The following are the current eligibility requirements for this program:

  • Your mortgage is not owned or guaranteed by Fannie Mae or Freddie Mac.
  • You owe more than your home is worth.
  • You occupy the home as your primary residence.
  • You obtained your mortgage on or before January 1, 2009.
  • Your mortgage payment is more than 31% of your gross (pre-tax) monthly income.
  • You owe up to $729,750 on your first mortgage.
  • You have a financial hardship and are either delinquent or in danger of falling behind on your mortgage loan.
  • You have sufficient, documented income to support the modified payment.
  • You must not have been convicted within 10 years of felony larceny, theft, fraud or forgery, money laundering or tax evasion, in connection with a mortgage or real estate transaction.

To learn more about the PRA, contact your financial institution or other mortgage service provider.

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Second Lien Modification Program (2MP)

If your first mortgage was permanently modified under HAMP and you have a second mortgage on the same property, you may be eligible for a modification or principal reduction on your second mortgage as well through MHA’s Second Lien Modification Program, or 2MP. The following are the general eligibility requirements for a 2MP:

  • Your first mortgage was modified under HAMP.
  • You must not have been convicted within 10 years of felony larceny, theft, fraud or forgery, money laundering or tax evasion, in connection with a mortgage or real estate transaction.
  • You have not missed three consecutive monthly payments on your HAMP modification.

NOTE: This particular program ends on December 31, 2013.

Lower Your Interest Rate

Mortgage loan rates continue to be at historically low levels. Through the MHA, there are refinance programs available that allow you to take advantage of these low rates and get into a more affordable and stable fixed-rate mortgage loan. There are three key programs we will review in this module:

By clicking on each of the links above, you will be given more detailed information about that particular type of MHA lending program. Or, simply continue through this course to learn more.

Home Affordable Refinance Program (HARP)

If you are current on your mortgage loan but have been unable to get traditional refinancing because the value of your home has declined significantly, you may be eligible to refinance through theHome Affordable Refinance Program, or HARP. HARP refinance loans require a loan application and underwriting process. Furthermore, some refinance fees will apply. Let’s take a look at the general eligibility criteria for this refinance program:

  • The mortgage must be owned or guaranteed by Freddie Mac or Fannie Mae.
  • The mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009.
  • The mortgage may not be previously refinanced under HARP unless it is a Fannie Mae loan that was refinanced under HARP from March through May 2009. (NOTE: If your loan was owned by Freddie Mac, you may check your potential eligibility for HARP with Freddie Mac.)
  • The current loan-to-value (LTV) ratio must be greater than 80%.
  • You must be current on your mortgage payments at the time of the refinance, with a good payment history over the past 12 months.

FHA Refinance for Borrowers with Negative Equity (FHA Short Refinance)

If you are not behind on your mortgage payments, but owe more than your home is worth, an FHA Refinance for Borrowers with Negative Equity, or FHA Short Refinance, may be an option to consider. This type of refinance is designed to help you refinance into a more affordable and stable FHA-insured mortgage loan. If your current lender agrees to participate in this type of refinance, it will be required to reduce the amount you owe on your first mortgage to no more than 97.75% of your home’s current value. The following are the criteria required for the FHA Short Refinance program:

  • Your mortgage may not be owned or guaranteed by Fannie Mae, Freddie Mac, FHA, VA or USDA.
  • You must owe more on your mortgage than your home is worth.
  • You must be current on your mortgage payments.
  • You must occupy the home as your primary residence.
  • You must be eligible for the new loan under standard FHA underwriting requirements.
  • Your total debit should not exceed 55 percent of your monthly gross income.
  • You must not have been convicted within 10 years of felony larceny, theft, fraud or forgery, money laundering or tax evasion, in connection with a mortgage or real estate transaction.

Treasury/FHA Second Lien Program (FHA2LP)

If you have a second mortgage and your first mortgage servicer agrees to participate in a FHA Short Refinance, you may be eligible to have your second mortgage on the same home reduced or eliminated through the Treasury/FHA Second Lien Program, or FHA2LP. With this program, the total amount of your mortgage debit after the refinance cannot exceed 115% of your home’s current value.

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When You Owe More Than Your Home Is Worth

For many Americans, the mortgage crisis has damaged the value of their home. In some areas of the country, the value of homes has dropped (on average) by a third or even a half. In these instances, trying to refinance to take advantage of lower rates and a more stable loan has become a significant problem. If you have found yourself in this situation, don’t feel alone, but recognize that there are options available to you through the MHA program. The following MHA programs may assist you if you owe more than your home is worth:

By clicking on each of the links above, you will be given more detailed information about that particular type of MHA lending program. Or, simply continue through this course to learn more.

Home Affordable Refinance Program (HARP)

If you are current on your mortgage loan but have been unable to get traditional refinancing because the value of your home has declined significantly, you may be eligible to refinance through theHome Affordable Refinance Program, or HARP. HARP refinance loans require a loan application and underwriting process. Furthermore, some refinance fees will apply. Let’s take a look at the general eligibility criteria for this refinance program:

  • The mortgage must be owned or guaranteed by Freddie Mac or Fannie Mae.
  • The mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009.
  • The mortgage may not be previously refinanced under HARP unless it is a Fannie Mae loan that was refinanced under HARP from March through May 2009. (NOTE: If your loan was owned by Freddie Mac, you may check your potential eligibility for HARP with Freddie Mac.)
  • The current loan-to-value (LTV) ratio must be greater than 80%.
  • You must be current on your mortgage payments at the time of the refinance, with a good payment history over the past 12 months.

FHA Refinance for Borrowers with Negative Equity (FHA Short Refinance)

If you are not behind on your mortgage payments, but owe more than your home is worth, an FHA Refinance for Borrowers with Negative Equity, or FHA Short Refinance, may be an option to consider. This type of refinance is designed to help you refinance into a more affordable and stable FHA-insured mortgage loan. If your current lender agrees to participate in this type of refinance, it will be required to reduce the amount you owe on your first mortgage to no more than 97.75% of your home’s current value. The following are the criteria required for the FHA Short Refinance program:

  • Your mortgage may not be owned or guaranteed by Fannie Mae, Freddie Mac, FHA, VA or USDA.
  • You must owe more on your mortgage than your home is worth.
  • You must be current on your mortgage payments.
  • You must occupy the home as your primary residence.
  • You must be eligible for the new loan under standard FHA underwriting requirements.
  • Your total debit should not exceed 55 percent of your monthly gross income.

You must not have been convicted within 10 years of felony larceny, theft, fraud or forgery, money laundering or tax evasion, in connection with a mortgage or real estate transaction.

Treasury/FHA Second Lien Program (FHA2LP)

If you have a second mortgage and your first mortgage servicer agrees to participate in a FHA Short Refinance, you may be eligible to have your second mortgage on the same home reduced or eliminated through the Treasury/FHA Second Lien Program, or FHA2LP. With this program, the total amount of your mortgage debit after the refinance cannot exceed 115% of your home’s current value.

Principal Reduction Alternative (PRA)

If your home is currently worth significantly less than you owe on it, the Principal Reduction Alternative, or PRA, may be something to consider. The PRA is designed to reduce the principal on your home, making your payments more affordable and in line with your area. The following are the current eligibility requirements for this program:

  • Your mortgage is not owned or guaranteed by Fannie Mae or Freddie Mac.
  • You owe more than your home is worth.
  • You occupy the home as your primary residence.
  • You obtained your mortgage on or before January 1, 2009.
  • Your mortgage payment is more than 31% of your gross (pre-tax) monthly income.
  • You owe up to $729,750 on your first mortgage.
  • You have a financial hardship and are either delinquent or in danger of falling behind on your mortgage loan.
  • You have sufficient, documented income to support the modified payment.
  • You must not have been convicted within 10 years of felony larceny, theft, fraud or forgery, money laundering or tax evasion, in connection with a mortgage or real estate transaction.

To learn more about the PRA, contact your financial institution or other mortgage service provider.

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Housing Finance Agency Innovation Fund for the Hardest Hit Housing Markets (HHF)

In 2010, the U.S. Treasury announced that it would provide more than $7.6 billion into a fund called the Hardest Hit Fund, which would go toward aiding homeowners in states hardest hit by the economic crisis. Since that time, many states have used that money to provide stabilization to housing markets and assist families from having to foreclose on their homes. It is important to point out that while the Hardest Hit Fund (HHF) programs complement the MHA lending programs, they are not limited to homeowners eligible for MHA lending programs.

The HHF programs vary by state, but may include the following:

  • Mortgage payment assistance for unemployed or underemployed homeowners.
  • Principal reduction to help homeowners get into more affordable mortgages.
  • Funding to eliminate homeowner’s second lien loans.
  • Help for homeowners who are transitioning out of their homes and into more affordable places of residence.

If you live in any of the states listed below, contact your state’s housing finance agency program office for more details:

  • Alabama
  • Arizona
  • California
  • Florida
  • Georgia
  • Illinois
  • Indiana
  • Kentucky
  • Michigan
  • Mississippi
  • Nevada
  • New Jersey
  • North Carolina
  • Ohio
  • Oregon
  • Rhode Island
  • South Carolina
  • Tennessee
  • Washington, D.C.

Avoiding Foreclosure

Due to many different situations, some people find themselves unable to afford their mortgage payment and feel it is time to transition into more affordable housing. If this is the case for you, the Home Affordable Foreclosure Alternatives (HAFA)program may be something to consider.

Home Affordable Foreclosure Alternatives (HAFA)

The Home Affordable Foreclosure Alternatives program, or HAFA, provides two different options for homeowners:

  • Short Sale: A short sale allows you to sell your home for an amount that falls “short” of the amount you still owe on the property. For example, if you owe $300,000 on your mortgage loan, and you are only able to sell your home for $200,000. In normal instances, you would still owe the lender $100,000, but in the case of a short sale, you would not owe the remainder.
  • Died-in-Lieu (DIL): In a DIL, your lender lets you give the title of your home back, transferring ownership back to them.

Benefits of HAFA Programs

No matter which program you select, there are some benefits to HAFA programs to help you transition with as little disruption to your life as possible. The following are some of the benefits of participating in an HAFA program:

  • You get free advice from HUD-approved housing counselors and licensed real estate professionals.
  • Unlike conventional short sales, a HAFA short sale completely releases you from your mortgage debt after selling the property. In other words, you will no longer be responsible for the amount that falls “short” of the amount you owe, and the deficiency is guaranteed to be waived by the servicer.
  • In a HAFA short sale, your mortgage lender will work with you to determine an acceptable sale price.
  • A HAFA short sale has a less negative effect on your credit score than foreclosure or conventional short sales.
  • Upon closing, HAFA may provide you with up to $3,000 in relocation assistance.

Eligibility for HAFA Programs

The following outlines the basic criteria to participate in any HAFA program:

  • You must have a documented financial hardship.
  • You must not have purchased a new home within the past 12 months.
  • Your first mortgage must be less than $729,750.
  • You must have obtained your mortgage on or before January 1, 2009.
  • You must not have been convicted within 10 years of felony larceny, theft, fraud or forgery, money laundering or tax evasion, in connection with a mortgage or real estate transaction.

The sooner you seek help, the more options will be available to you. You must be prepared to provide a Request for Mortgage Assistance (RAM) to get started with the process. If you have already received an offer for your home, you will need to submit an Alternative Request for Approval of Short Sale (Alternative RASS) and an executed sales contract.

Unemployment Assistance

When the economic crisis hit, many Americans lost their jobs. If you are unemployed, there may be some relief in sight because of two different MHA programs:

By clicking on each of the links above, you will be given more detailed information about that particular type of MHA lending program. Or, simply continue through this course to learn more.

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Home Affordable Unemployment Program (UP)

The Home Affordable Unemployment Program, or UP, may reduce your mortgage payments to 31% of your income or suspend them altogether for 12 months or more, depending upon your situation. The following are the eligibility requirements for this program:

  • You must be unemployed and eligible for unemployment benefits.
  • You must occupy your home as your primary residence.
  • You must not have previously received a HAMP modification.
  • You must have obtained your mortgage loan on or before January 1, 2009.
  • You must owe up to $729,750 on your home.

MHA’s UP is not currently available for homeowners with mortgages held by Fannie Mae or Freddie Mac; however, both of these entities have their own forbearance arrangements for unemployed homeowners. It is important to point out that you may be required to make a partial payment, not to exceed 31% of your verified monthly gross income, including unemployment benefits. Furthermore, you will be evaluated for a HAMP mortgage modification at the end of your UP forbearance period if it is available at that time.

Housing Finance Agency Innovation Fund for the Hardest Hit Housing Markets (HHF)

In 2010, the U.S. Treasury announced that it would provide more than $7.6 billion into a fund called the Hardest Hit Fund, which would go toward aiding homeowners in states hardest hit by the economic crisis. Since that time, many states have used that money to provide stabilization to housing markets and assist families from having to foreclose on their homes. It is important to point out that while the Hardest Hit Fund (HHF) programs complement the MHA lending programs, they are not limited to homeowners eligible for MHA lending programs.

The HHF programs vary by state, but may include the following:

  • Mortgage payment assistance for unemployed or underemployed homeowners.
  • Principal reduction to help homeowners get into more affordable mortgages.
  • Funding to eliminate homeowner’s second lien loans.
  • Help for homeowners who are transitioning out of their homes and into more affordable places of residence.

If you live in any of the states listed below, contact your state’s housing finance agency program office for more details:

  • Alabama
  • Arizona
  • California
  • Florida
  • Georgia
  • Illinois
  • Indiana
  • Kentucky
  • Michigan
  • Mississippi
  • Nevada
  • New Jersey
  • North Carolina
  • Ohio
  • Oregon
  • Rhode Island
  • South Carolina
  • Tennessee
  • Washington, D.C.

Second Mortgage Loan Assistance

If you have a home equity loan, HELOC, or some other second lien that is making it difficult for you to keep up with your mortgage payments, the Second Lien Modification Program, or 2MP, may be a program to consider. The following are the general eligibility requirements for a 2MP:

  • Your first mortgage was modified under HAMP.
  • You must not have been convicted within 10 years of felony larceny, theft, fraud or forgery, money laundering or tax evasion, in connection with a mortgage or real estate transaction.
  • You have not missed three consecutive monthly payments on your HAMP modification.

NOTE: This particular program ends on December 31, 2013.

Get Assistance From An Hud-Approved Housing Counselor

For most people, going through financial hardship, or possibly losing a home, is usually a something they have not experienced before and they may be overwhelmed with their circumstances. If you find yourself in this situation and are in need of help, it is best for you to speak with a HUD-approved housing counselor to go through your options, walk you through the process of the program you determine to be best for your situation, and even discuss budgetary concerns going forward.

Why talk with a HUD-approved housing counselor?

One of the best reasons to talk with HUD-approved housing counselors is they are experts in the field. They deal with issues like yours on a daily basis and will be able to provide you with real options to make your situation a little better…and less overwhelming.

Furthermore, there is no charge to work with a HUD-approved counseling agency. Plus, a counselor will explain what documents you will need to provide to your mortgage lender (or servicer) and may be able to contact your mortgage lender or servicer on your behalf. Finally, a counselor will help you make a budget that will show you how to meet your monthly mortgage payment and other expenses.

To find a housing counselor in your area, please click here. Or, you may also call (888) 995-HOPE (4673), 24 hours a day, seven days a week.

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Applying for MHA Programs

While each MHA program is a little different, there are some general items you will need to have available to make the process as simple as possible. Some lenders may ask for more or less of the following information, but it is best to have everything ready:

  • Your monthly mortgage statement.
  • Any information you have about other mortgages on your home (if applicable).
  • Your two most recent pay stubs for all household members contributing toward the mortgage payment.
  • The last two years of your Federal tax returns.
  • If self-employed, your most recent quarterly or year-to-date profit and loss statement.
  • Any documentation of income you receive from other sources, such as alimony, child support, social security, etc.
  • Your two most recent bank statements.
  • A utility bill showing your name and property address.
  • An unemployment insurance letter (if applicable).
  • The account balances and minimum monthly payments due onall of your credit cards.
  • Any information you can provide about your savings and other assets.

It may also be helpful for you to have a letter describing any circumstances that caused your income to be reduced or expenses to be increased (e.g., job loss, divorce, illness, etc.). In some instances, this letter will be required for documentation purposes.

You will also need to complete the following three forms:

Avoiding Foreclosure Scams

Tips for Avoiding Foreclosure Scams

Unfortunately, there are some scam artists who are looking for desperate people trying to avoid foreclosure. With that said, they will provide you with options that may look “too good to be true” and sell programs that do not exist in the way they describe them. The following tips will help you avoid being tricked when you are looking to avoid foreclosure:

  • Do not work with anyone who asks you to pay a fee in exchange for counseling services or the modification of a delinquent loan.
  • Beware of people who pressure you to sign papers immediately or try to convince you that they can "save" your home if you sign or transfer over the deed to your house.
  • Never sign over the deed to your property to any organization or individual unless you are working directly with your mortgage lender as a means to forgive your debt.
  • Do not make a mortgage payment to anyone other than your mortgage lender without the lender’s approval.

Abide by the old adage: “If it seems too good to be true, it probably is.” That way, you will not be caught in anything that will cause more harm than good in the long-run.

If You Have Been the Victim of a Scam

If you think you have been the victim of a foreclosure or other mortgage lending scam, you should file a complaint with the Federal Trade Commission (FTC) as soon as possible. Either call them at 877-FTC-HELP (877-382-4357), or go to their website at http://www.ftc.gov. You should also talk with your mortgage lender as soon as possible so it is aware of your circumstances and may be able to direct you further.

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