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Government Extends MHA Program for Distressed Homeowners

July 22nd, 2014 7:27 AM by Jackie A. Graves, President

Government Extends MHA Program for Distressed Homeowners photo

Homeowners who are struggling to make their mortgage payments and those who lack the equity to refinance will continue to get help through a government program that had been set to expire.

The Making Home Affordable (MHA) program, which includes both the Home Affordable Refinance Program (HARP) and the Home Affordable Modification Program (HAMP), has been extended through December 31, 2016.

U.S. Treasury Secretary Jacob Lew announced the extension June 26 as part of the MHA Fifth Anniversary Summit.

Since the MHA program was introduced in April 2009, it has enabled more than 1.3 million homeowners to permanently modify their mortgage loans through HAMP. More than 3.1 million homeowners have refinanced their loans with the help of the HARP program.

Benefits of HARP and HAMP

The HARP program, designed to allow homeowners who are underwater on their loans to refinance into mortgages with lower interest rates, is limited to homeowners with loans guaranteed or owned by Fannie Mae and Freddie Mac.

In the first quarter of 2014, 23% of all refinances were part of the HARP program, but the number of HARP refinances as well as all other refinances has slowed in recent months.

More than six million homeowners in the U.S. are still underwater on their loans, according to Lew. Many of those homeowners could benefit from a refinance, provided they have strong enough credit to qualify for a new loan and can afford to pay closing costs.

In order to be eligible for HARP, your loan must have been sold to Fannie Mae or Freddie Mac before May 31, 2009.

The HAMP program—designed to help homeowners who can no longer afford their home loan payments—is available to borrowers who took out a loan before Jan. 1, 2009, that is owned, insured or guaranteed by Fannie Mae, Freddie Mac, the Federal Housing Administration (FHA), the Department of Veterans Affairs (VA) or the U.S. Department of Agriculture (USDA).

Borrowers must provide evidence of financial hardship and make on-time loan payments during a trial period before their loan can be permanently modified.

Housing market improvements

As the effects of the housing crisis and the recession linger, many homeowners continue to struggle to make their mortgage payments and rebuild equity in their homes. While the recovery has helped millions of homeowners regain their home value, not all neighborhoods have seen values rise to their pre-recession levels.

However, the foreclosure crisis has slowed.

RealtyTrac, a foreclosure and real estate data tracking firm, reporting that total foreclosure activity in May fell to the lowest level since 2005. The continuation of HARP and HAMP are meant to prevent an uptick in foreclosure activity.

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Posted in:General
Posted by Jackie A. Graves, President on July 22nd, 2014 7:27 AM

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