The most notable of these is the Home Affordable Modification Program (HAMP). This is a government sponsored program whereby homeowners can modify their mortgages if they meet certain criteria. The home has to be your primary residence, you must owe less than $729,750 on your primary mortgage, must have owned the home prior to January 1, 2009 and your first mortgage, including P.I.T.I, must be greater than 31% of your gross income. This program is geared toward owners that are having trouble paying their current mortgages such as someone that recently had a reduction in hours or is currently “under-employed.”
An additional government sponsored program is the Home Affordable Refinance Program (HARP). This program is for owner occupants in 1 to 4 unit dwellings that must be their primary residence. Your loan must be owned or guaranteed by Fannie Mae or Freddie Mac. At the time of application you must be current on your mortgage payments and the amount owed on the home does not exceed 125% of current market value. This program is for people that are making their payments but cannot take advantage of lower rates due to their homes being “upside down” where they owe more than their home is worth.
If a homeowner has modified their loan through the HAMP or HARP programs and did not successfully complete the terms of the trail modification or had the loan modified and missed 2 consecutive payments there is another option that is available. There is the Home Affordable Foreclosure Alternative Program (HAFA). This program will allow owners to short sale their home or provide the mortgagee a deed in lieu of foreclosure.
The effectiveness of these programs can be debated, ask any homeowner that has had their loan modified and their answer would be “it was resounding success” however, ask another homeowner that lost their home to foreclosure because they were bogged down in the red tape and bureaucracy and I believe their thoughts on the program would be decidedly different. Somewhere in the middle is the actual effectiveness of the programs. According DS News as reported on 11/01/2010:
“According to the latest estimates from HOPE NOW, the private sector alliance of servicers, investors, mortgage insurers,
and nonprofit housing counselors.
Data released by the organization Monday shows that the industry completed close to 150,000 permanent loan modifications
during the month of September alone – 120,000 of which were through servicers own proprietary programs and 27,840 under
the federal government’s Home Affordable Modification Program (HAMP)”
The private sector loan modifications are happening at nearly a 4 to 1 ratio, this is a staggering statistic! Additionally, nearly 50% of participants in various loan modification programs have fallen out of these programs. Unfortunately, due to the economy and lack of employment some people cannot afford their home no matter how greatly their mortgages are modified.
While these programs have certainly provided valuable aid to people who desperately need it, the over effectiveness can certainly be questioned. It would appear that they, to this point, have not lived up to their billing. Let us know what you think about these programs, past experience with loan modification or any insight you may have.
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