Feds Expand Mortgage Loan Modification Eligibility Under HARP
The federal government recently announced expansion of its Home Affordable Refinance Program (HARP), which helps borrowers who have been able to make payments on federally backed loans but have not been able to refinance due to stricter lending criteria.
February 03, 2012 /24-7PressRelease/ -- Every financial challenge has a solution, but most consumers have questions about issues such as where negotiating with creditors ends and bankruptcy begins. Many debt relief strategies overlap with other sound alternatives, and bankruptcy attorneys are in a good position to explain the advantages of a particular course of action. For instance, in many situations the best way to stop foreclosure is the immediate relief from creditors granted by a Chapter 7 or Chapter 13 bankruptcy.
Due to the economic struggles of the past few years, a variety of loan modification strategies have emerged to keep people in their homes despite financial challenges. For families or individuals whose mortgage obligations significantly exceed the equity in their homes, these programs can provide significant benefits.
The federal government recently announced expansion of its Home Affordable Refinance Program (HARP), which helps borrowers who have been able to make payments on loans backed by Fannie Mae or Freddie Mac, but have not been able to refinance due to stricter lending criteria. Relevant measures implemented by the Federal Housing Finance Agency (FHFA) include:
- Doing away with HARP's eligibility limit of 125 percent on the extent to which the financed amount can exceed the property's value -- borrowers who are deeper underwater than this level did not previously qualify
- Focusing on mortgages that originated between 2004 and 2008, when typical 30-year rates exceeded five percent
- Encouraging more lending institutions to participate in the refinancing program
Federal officials have expressed frustration with the seeming inability of the housing sector to bounce back, and they estimate that these changes could provide relief for one million American households. However, that figure represents less than ten percent of the total estimate of underwater mortgages nationwide, a number that underscores a very real barrier to the financial security of many individuals and couples.
Making Homes an Affordable and Sensible Investment Again
Even if they can manage to keep up with monthly payments, homeowners saddled with a mortgage that far exceeds the market value of the home have justifiable concerns about this situation. After severe reductions in housing prices deflated real estate markets in Tennessee and elsewhere, many borrowers find themselves financing a debt that seems to have very little upside.
As you start to add other factors into the mix, such as a lost job, steep medical expenses or lost retirement savings, many consumers have begun to realize the advantages of pursuing loan modifications. By making key changes to interest rates, the payback period or other factors, a lender may be willing to help a homeowner lower monthly payments and head off foreclosure proceedings.
Suitable mortgage modifications can be achieved by a borrower, often working with a debt relief lawyer, who reaches out to the bank or other mortgage company. In order to make such options more widely available to Americans, the Departments of Treasury and Housing and Urban Development (HUD) created a series of Making Home Affordable (MHA) programs to help borrowers lower payments, reduce interest rates, get through a period of unemployment, secure second mortgages or exit home ownership gracefully and obtain relocation assistance.
In addition to HARP, another federal MHA program is the Home Affordable Modification Program (HAMP), which limits monthly mortgage payments to 31 percent of an individual or couple's verified monthly pre-tax income. HAMP eligibility is based on using the house in question as a primary residence, owing less than $730,000, demonstrable financial hardships and other factors.
Exploring a Client's Full Range of Options for Financial Relief in Hard Times
Any steps that help Tennessee homeowners refinance at lower rates and apportion income in reasonable ways is good for the family and good for the economy. Families who benefit from expanded availability of federal mortgage assistance programs can remain as productive and secure neighbors and members of their communities.
For many Americans facing economic hardships, a single silver bullet will not be sufficient. A secure financial future might only be possible by also focusing on credit card debt, auto loans or unpaid medical bills. By allowing a client to explore the full range of debt relief options, a bankruptcy attorney can create customized solutions to uniquely challenging circumstances.
Chapter 7 and Chapter 13 bankruptcy provide particularly potent relief for debtors, and have the distinct advantage of allowing participants to keep their homes. Because personal financial recovery involves so many complex factors, a variety of legal processes and a broad range of potential outcomes, seeking professional advice from a debt relief lawyer allows debtors to step confidently toward a future of stability.
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