Order Now!

User Reviews

An Online Course

Home Mortgage Relief 101

Nearly eighty percent of owners who underwent foreclosure proceedings last year did not contact their lender to ask about possible options and alternatives prior to being forced out of their home. Or, if they did contact their lender, they became frustrated with long wait times and unreliable information, and they simply gave up. Assuming they had no other option, and were unable to make monthly mortgage payments as they had in the past, many were not aware of ‘loan modification’ and ‘loan restructuring’ programs which the lender may have had in place.

In an effort to remedy this problem and help owners stay in their homes, a Federal program called Hope for Homeowners has been initiated. The program’s goal is to offer an alternative to foreclosure by means of assisting borrowers in refinancing or modifying their mortgage, lowering monthly payments and in some instances forgiving part of the debt. Under some of these new relief programs, a borrower may obtain reduced interest rates, either temporarily or permanently, a portion of the home debt may be wiped away, or a combination of both may take place.

The Federal Government in conjunction with lending institutions will share in the costs of the new alternative loan programs.

The following is a summary of the current government backed programs being offered through various lenders. Be aware that not all lenders will participate, so be sure to check with your lender first, then seek an alternative lender if need be.

1. Home Affordable Mortgage Program (HAMP)

Are you eligible?
- The home must be owner occupied
- May be in default or at risk of default
- Primary mortgage must be less than $729,750
- May not have misrepresented income in the original loan application
- Show you can make the new house payment based on your income and expenses
What are the benefits?
- You may refinance with a lower interest rate
- Your lender will lower your monthly payments to be 31% of your gross income
- The refinanced loan will last for 5 year term

Borrowers who take advantage of Hope for Homeowners will have to share their house price appreciation with the government when they refinance the loan or sell the house. Depending on how long they have the loan, they will have to give the government as little as half and as much as all of the gain in the home’s value. For example, if the house was appraised at $100,000 when the loan is refinanced, and then the house sells for $120,000, the owner will have to give the government $10,000, which equals ½ of the appreciation value of the home.

2. Home Affordable Refinance Program (HARP)

The Home Affordable Refinance Program is available through June 2011 and allows a home owner to refinance into low mortgage interest rates even if the property value has gone down in value. The HARP program was designed to allow borrower's with a loan owned by Freddie Mac to refinance with a new loan balance up to 125% of their current appraised value.

Are you eligible?
What are the benefits?
- You do not need to use your current lender

3. Second Lien Modification Program (2MP)

Are you eligible?
- Your first mortgage (lien) must be modified under HAMP
- Your second mortgage must be with a lender participating in the Second Lien Modification program
- The mortgage or lien was originated before January 2, 2009
- The lender must offer to modify the second mortgage or at least provide some level of reduction for a borrower’s for that second mortgage
What are the benefits?
- Reduce interest rate to one percent for second liens on fully amortized loans
- Reduce interest rate to interest only second mortgages (liens)

4. Home Affordable Unemployment Program (UP)

The Program provides an unemployed homeowner a temporary period of time (forbearance) during which the regular monthly mortgage payment is reduced or suspended.

Who is Eligible?
- * Qualifying unemployed homeowners through participating HAMP servicers
- * Must be your first mortgage only
Benefits
- * Monthly payments can be cut down to 31% of unemployment insurance benefit for three months
- * Visit MakingHomeAffordable.com/contact_servicer.html to find out if your servicer is a program participant

5. Home Affordable Foreclosure Alternatives (HAFA)

These options are available for homeowners who: 1. do not qualify for a trial mortgage modification under the Making Home Affordable Program; 2. do not successfully complete the trial period for their modification; 3. miss at least two consecutive payments during their modification period;

Short Sale
In a short sale, the servicer allows the homeowner to list and sell the mortgaged property with the understanding that the net proceeds from the sale may be less than the total amount due on the first mortgage.
Deed-in-Lieu of Foreclosure
Generally, if the borrower makes a good faith effort to sell the property but is not successful, a servicer may consider a deed-in-lieu of foreclosure. With a deed-in-lieu, the borrower voluntarily transfers ownership of the property to the servicer, provided the title is free and clear of other mortgages, liens, and encumbrances.

6. FHA (FHA-HAMP)

Who is eligible?
- Must be your primary residence
- Must owe at least 15% more on the property than it’s actually worth.
What are the benefits?
- Permanently reduces a Borrower’s monthly mortgage payment through the use of a partial claim, which defers the repayment of mortgage principal through an interest free subordinate (secondary) mortgage that is not due until the first mortgage paid off.
- Allows FHA lenders to offer FHA refinancing loans that forgive at least 10% of a qualifying borrower’s original mortgage principal.

Tips to Remember

Do your research and learn as much as you can about the loan modification process. Try to and get the most up to date information available, as these programs may change in their requirements and effective dates.
Ask your lender how the modification or refinance will affect your credit score. If possible, request in writing that your application for modification will not be reported negatively on your credit report.
Be prepared when speaking to your lender and have the following information close at hand:

Information Checklist

Information on all current mortgages on your property.
Current copy of your credit report.
List of your credit card account balances and the minimum monthly payments
Copy of your most recent income tax return
List of your savings accounts, stock and other assets
Monthly gross income in your household. Have copies of recent pay stubs, (if applicable, available)
Documentation of any other source of income you receive
Reasons which caused your income to be reduced (such as a loss of employment, divorce, illness, etc.) or added expenses which have contributed to your difficulty in making current mortgage payment

Resources and Contacts:

Making Homes Affordable – Hope For Homeowners Program
Call 1-888-995-4673 to learn about Making Home Affordable and to speak with a HUD-approved housing counselor
Payment Reduction Estimator
Understanding the Trial Period
FHA Program
Frequently Asked Questions
Mortgage Refinance Examples
Freddiemac.com HAMP program
Mortgage Modification Toolkit for Homeowners

This course is an online training course that empowers participants to understand and learn the tips and tricks necessary to taking advantage of the government benefits available today.
- Rules and guidelines for participating in loan modification programs
- The 71 participating lenders in HAMP, their phone numbers and e-mails
- Documents and forms required for HAMP modifications
- What is a BPO (Broker Price Opinion) and you need one
- Prequalification questions for HAMP
- Implications of “Imminent Danger of Default” and “Verifiable Hardship”
- The significance of the “31 percent ratio” between Gross Monthly Income and Mortgage Payments
- Questions to ask your lender or mortgage service to begin the mortgage modification process
- Effective methods to potentially lower your loan interest rate to two percent
Understanding Short Sales
- Learn what to expect when mediating a monthly mortgage payment reduction or the sale of a home for less than the outstanding mortgage (a short sale). As an added bonus, receive documents and forms required for such transactions.
- Understand the Process
- Learn What's Needed
- Learn What to Expect
- Documents and forms required

Back to Previous Page

[ Home ] [ About Us ] [ All About Escrow ] [ Articles ] [ Ask Sandy ] [ Books ] [ Glossary ] [ Contact Us ] [ Links ] [ Mortgage Calculator ] [ Order ] [ Q & A ] [ Reviews of The Complete Guide ] [ Schools ] [ Search Site ] [ Suggestions ] [ Survey ]