Government Foreclosure Help for Homeowners

May 7th 2016

Government Foreclosure Help for Homeowners

There are lots of reasons people find themselves falling behind on their mortgage. Before you start missing payments, you should seek out help to avoid foreclosure. Thankfully, there are a number of government programs available to get you back on the track to homeownership.

Home Affordable Modification program (HAMP)

The HAMP option will lower your monthly payment in an effort to make the payment more affordable. You'll still pay 31 percent of your pre-tax (gross) monthly income. Typically, this results in a reduction of about 40 percent of your monthly mortgage payment. For about 18 percent of HAMP homeowners, this is a reduction of $1,000 or more off their monthly mortgage payment.

Principal Reduction Alternative (PRA)

When you're upside-down on your mortgage, it means you owe more money than your house is worth. If there's a significant difference between these two figures, PRA can help negotiate a reduction in the amount you owe on your home. This program works with investors and servicers to reach a mutually beneficial arrangement.

Second Lien Modification Program (2MP)

Do you have a second mortgage on a home that has already qualified for HAMP SM? In this case, the 2MP program may be able to help you get a principal reduction or loan modification on your second mortgage. This includes a HELOC, home equity loan or various other second liens. If a second mortgage is making it difficult for you to make your payments, this MHA program may be able to help.

Home Affordable Refinance Program (HARP)

When you're stuck in a mortgage with difficult terms and unable to refinance because your home has declined in value, HARP may be the answer. This program can help you refinance into an affordable, and more stable, new mortgage. You must be current with your payments to qualify for this program. There are other restrictions, but this is the most common reason for people to be disqualified from HARP assistance.

Special Programs for Unemployed Homeowners

Many homeowners have found themselves stuck in a mortgage without a job because their company has closed, downsized or moved off-shore. If you're in this situation, there are several government foreclosure assistance programs to help you.

Home Affordable Unemployment Program (UP)

First, you've got to be unemployed to qualify for UP. If you're also falling behind on your mortgage payments, UP may be able to offer a short-term suspension or reduction in your payments. This will last for a minimum of 12 months, so you have enough time to find employment and get your finances in order.

Emergency Homeowners’ Loan Program (EHLP)

The EHLP program is only offered to homeowners in the following states: Connecticut, Delaware, Idaho, Maryland and Pennsylvania. These programs vary from state to state, so it's best to check with local assistance providers if you live in one of the listed states.

FHA Forbearance for Unemployed Homeowners

The latest Federal Housing Administration (FHA) requirements mandate that loan servicers must extend forbearance periods for unemployed homeowners to one year (12 months). This new rule went into effect in July 2011 and extended the forbearance period from four months up to 12 months. Also, this removed hurdles, which now makes it much easier for unemployed homeowners to become qualified. If you're unemployed, it's worth looking into FHA forbearance as a way to keep your house while you're looking for a job.

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