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Countless homeowners are underwater with no real understanding of their options for a loan modification or refinance.  In fact, many are facing foreclosure and unsure what their next move should be.  Do I  allow the property to foreclose or get a loan modification?  Do I qualify?  How do I qualify and what is the process?  Is bankruptcy the ultimate option?

The options and the questions related to it are enough to make you mail the keys in to the bank and walk away but we’ve got answers!

If you have any of these questions, this post is for you!

Home Affordable Modification Program (HAMP)

This program targets homeowners who are having a difficult time making mortgage payments for reasons that do not include unemployment.  The goal of this program is to lower your monthly mortgage payment to 31 percent of your monthly income so that your mortgage payments become more affordable.

Here’s How You Qualify

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

 Home Affordable Refinance Program (HARP)

This program targets homeowners who are current on their mortgage but for whatever reason unable to get their home refinanced through conventional methods due to the decline in home value.  The goal is to put the homeowner into a new loan which much more affordable payments.

Here’s How You Qualify

  • You have a mortgage owned or guaranteed by Fannie Mae or Freddie Mac.
  • You do not have an FHA, VA or USDA loan.
  • You are current on your mortgage payments and have not been more than 30 days late making a payment over the last year.
  • Have a first mortgage not exceeding 125 percent of the current market value of your home.
  • The refinance will improve the long-term affordability or stability of your mortgage.
  • You have the ability to make the new payments.

Call your bank to determine if they are participating in this program and then take the next steps:

  1. Use this Loan Lookup tool to find out whether your loan is owned or guaranteed by Fannie Mae or Freddie Mac
  2. Call your bank to discuss your options.
  3. If that doesn’t work then call at least 5-10 other banks to discuss your options and compare rates and terms.

Home Affordable Foreclosure Alternatives (HAFA) Program

This program targets homeowners who are interested in selling their home via short sale but the benefit from this program is that there is no balance owed on the property when all is said and done.  The end result is a short sale or died in lieu of foreclosure.  The latter happens when you give the deed back to your bank instead of foreclosing altogether.  Both you and the bank cut your losses and move on without penalty of owing a balance or being sued for for the balance down the line.  A nice bonus is that you will receive $3000 in relocation assistance

Here’s how you qualify:

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

Next Steps:

Based on the information above, call your mortgage servicer (where you mail your payments) and discuss your situation to determine how you can get started with one of these programs should they apply to you.

What To Expect

Given the volume of homeowners in need, expect some delay or even less than friendly customer service agents.  But, the key is to be persistent and get all of your paperwork together quickly while keeping it in a safe place.  Why?  The banks have been known to lose paperwork several times over leaving many homeowners frustrated often opting to abandon the process altogether.  Don’t give up!  The process is known to take many months but this is largely determined by your servicer and how diligently you follow up on getting the required paperwork in to them.

 

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