The Obama Administration recently announced adjustments to the Home Affordable Modification Program (HAMP) and to Federal Housing Administration (FHA) programs. Designed to assist responsible homeowners who have been adversely affected by the economic crisis, the enhancements aim to give a second chance to up to 3 to 4 million Americans through year-end 2012. The program enhancements offer more help to unemployed homeowners and to those who owe more on their mortgage than their home is worth, due to declines in home values in many areas.
Specific Changes in HAMP
Modifications to the program primarily extend more flexibility to the mortgage servicers and originators who assist struggling homeowners, rather than going directly to homeowners. A comprehensive approach melds local and state housing agency initiatives with tax credits for homebuyers, mortgage modifications, neighborhood stabilization and community development programs, mortgage refinancing, and support for Fannie Mae and Freddie Mac.
Results of HAMP
According to Administration figures, over four million homeowners took advantage of mortgage refinance options, resulting in savings of more than $7 billion annually. Another million have taken advantage of the loan modification program, netting them average savings of $500 monthly and increasing home equity by more than $12,000. Among other programs, $23 billion has been pumped into Housing Finance Agencies across 49 states to increase opportunities for rental resources and sustainable homeownership for American families.
Mortgage Rates at Record Lows
Mortgage rates continue to hover at historic lows, with no indication of them rising in the near future. This makes refinancing options to lower payments an attractive option for many homeowners. One reason for continued low rates is that Treasury and the Federal Reserve have purchased over $1.4 trillion in agency mortgage backed securities as part of the Administration's comprehensive recovery strategy. To see if you are eligible for FHA loan start with FHA Loan Quote.
Loan Modification Eligibility
According to a HUD statement released March 26, 2010, the Administration seeks to balance help for "responsible" homeowners with recognition that they cannot and should not help everyone.
Eligible homeowners targeted for assistance must live in an owner-occupied principal residence with a mortgage balance less than $729,750. Their monthly mortgage payments exceed 31 percent of their income and they have a demonstrated financial hardship.
More FHA refinance options allow greater opportunities for lenders to restructure loans for those whose home is worth less than the amount owed. The FHA refinance program is voluntary for homeowners and lenders, and homeowners looking to take advantage of this option must be current on their mortgages.
Footing the Bill
Drawing mainly from Congress' $50 billion allocation for the Troubled Asset Relief Program (TARP), costs for modifications to the various housing programs will be shared between the Federal Government and the private sector.
Where to Go for Help
If you are a struggling homeowner and you would like more information, visit www.makinghomeaffordable.gov, the official government website.