Home Foreclosure, And How to Avoid It – Part 1

A number of programs have been implemented by the Obama Administration to assist homebuyers who are in danger of having their homes taken away from them by their lender; meaning they’re at risk of foreclosure because they’re struggling to meet their monthly mortgage repayments. Most of these programs are being administered by the HUD and the United States Treasury Department. This article is just a summary of the programs offered, so please read on to determine if one of these programs may be of assistance to you.

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A Quick Word Before We Start!

Before moving on to the programs on offer, allow us to offer this advice. If you’re confused about the foreclosure process; you’re unsure of your rights and obligations, and you feel you should seek legal advice or assistance, please don’t hesitate to contact George Russo and Associates. We’re here to help you with all legal matters, and we’re happy to provide obligation-free advice on all matters pertaining to real estate law in New York City, Brooklyn and Queens. We’re your local go-to real estate law firm, and we’re very experienced in foreclosures.

MHA: The ‘Making Home Affordable’ Program

The Making Home Affordable © (MHA) Program has been described as a critical part of the broad strategy to assist homeowners avoid foreclosure. The Obama Administration is determined to stabilize the housing market in the US, thus improving the economy. At today’s lower rates, homeowners can now access more stable loans and lower their monthly mortgage repayments. For those homeowners where homeownership has become undesirable, or unaffordable, this program is able to provide a way out and thus avoid foreclosure. In addition, the aim of the program is to be responsive to the needs of today’s homeowners, so there are options available for homeowners who are unemployed and homeowners who now owe more than their home is worth.

Have a look at the following summaries to determine which program options might best suit your own circumstances.

Refinance or Modify Your Loan with Lower Payments

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  • HAMP: (Home Affordable Modification Program). HAMP can lower your monthly mortgage repayments to 31% of your verified pre-tax income, making your payments easier to manage. Typically, the HAMP modification will result in a 40% drop in monthly mortgage payments. 18% of HAMP homeowners are able to reduce their repayments by a minimum of $1,000.
  • PRA: (Principal Reduction Alternative). PRA was created specifically for homeowners whose homes today are worth a lot less than they owe: it encourages investors and servicers to reduce the amount you currently owe on your home.
  • 2MP: (Second Lien Modification Program). Let’s say your first mortgage has been permanently modified under HAMP and you also have a second mortgage on the property, you could be eligible for a principal reduction or a modification on your second mortgage under 2MP. And, if you have an HELOC (Home Equity Loan) or other second lien that’s making it difficult to maintain mortgage payments, you should ask for more information on this program.
  • HARP: (Home Affordable Refinance Program). If you’re current on your mortgage but have not been able to refinance in the traditional way due to the declining value of your home, you might be eligible to refinance through HARP. HARP has been designed specifically to help homeowners refinance into a more stable and affordable mortgage.

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