You will find below helpful information about most existing Federal and State programs designed to help homeowners keep their homes and avoid short sale and/or foreclosure.
I - US Department Of Treasury: Making Home Affordable Program
The Making Home Affordable Program is part of the Obama Administration's broad and comprehensive strategy to get the economy and the housing market back on track. The Making Home Affordable Program offers several alternatives to distressed home owners in order to avoid short sale or foreclosure:
(1) refinancing mortgage loans through the Home Affordable Refinance Program (HARP)
2) modifying first and second mortgage loans through the Home Affordable Modification Program (HAMP) and the Second Lien Modification Program (2MP)
(3) providing temporary assistance to unemployed homeowners through the Home Affordable Unemployment Program (UP), and
4) offering other alternatives to foreclosure through the Home Affordable Foreclosure Alternatives Program (HAFA).
1/ Home Affordable Refinancing Program (HARP)
Many homeowners pay their mortgages on time but are not able to refinance to take advantage of today’s low mortgage rates, in particular due to a decrease in the value (including the equity) of their home.
The Home Affordable Refinance Program will help borrowers whose loans are held by Fannie Mae or Freddie Mac to refinance into a more affordable mortgage.
You may be eligible to apply if you meet all of the following:
Please note that this housing program is available until end 2013.
Note to distressed homeowners: HAMP is a viable alternative to avoid a short sales or a foreclosure if your loan is not backed by Fannie Mae or Freddie Mac.
2-2/ Treasury FHA-Home Affordable Modification Program (HAMP)
If you have a loan that is insured or guaranteed by the Federal Housing Administration (aka FHA), you may be eligible for this program.
FHA, VA and USDA all offer programs for struggling homeowners with a view to help them reduce their monthly mortgage payment to 31%f of their verified monthly gross (pre-tax) income.
Note to distressed homeowners: HAMP is a viable alternative to avoid a
short sales or a foreclosure if your loan is backed by Fannie Mae or
3/ Second Lien Modification Program (2MP)
If your first mortgage was permanently modified under HAMP and you have a second mortgage on the same property, you may be eligible for a modification or principal reduction on your second mortgage under 2MP.
2MP is designed to work in tandem with HAMP to provide a comprehensive solution for homeowners with second mortgages to increase long-term affordability and sustainability.
If the servicer of your second mortgage is participating, they will automatically evaluate you for a second lien modification.
You may be eligible to apply if you meet all of the following criteria:
This housing program will sunset on December 31, 2012.
5/ Home Affordable Foreclosure Alternatives (HAFA)
If your mortgage payment is unaffordable and you are interested in transitioning to more affordable housing, you may be eligible for a short sale or deed-in-lieu of foreclosure through HAFA.
The benefit of a HAFA short sale is that you are no longer responsible for the difference between what you owe on your mortgage and the amount that your home sells for. You will also receive $3,000 in relocation assistance upon successful closing of your short sale.
In a short sale, the servicer allows you to list and sell the mortgaged property with the understanding that the net proceeds from the sale may be less than the total amount due on the first mortgage.
With a deed-in-lieu of foreclosure, you voluntarily transfer ownership of your property to the servicer. Generally, if you make a good faith effort to sell your property but if you are not successful, a servicer may consider a deed-in-lieu of foreclosure.
You may be eligible to apply if you meet all of the following:
- 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.
HAFA is available for mortgages that are owned or guaranteed by Fannie Mae and Freddie Mac or serviced by over 100 HAMP participating servicers.
Over one hundred mortgage companies have agreed to participate in the Home Affordable Modification Program (HAMP).
This housing program will sunset on December 31, 2013.
6/ Principal Reduction Alternative Program (PRA)
If your home is
currently worth significantly less than you owe on it, based on the Principal
Reduction Alternative (PRA), some servicers and investors will reduce the amount
you owe on your home.
Be aware that
on July 31, 2012 the Director of the Federal
Housing Finance Agency (FHFA), which oversees Fannie Mae and Freddie Mac, has
issued a statement that the FHFA would not implement the Home Affordable
Modification Program Principal Reduction Alternative (HAMP PRA).
II - California Housing Finance Agency
Unemployment, reduced property values, severely underwater mortgages and adjustable rate mortgages are stressing California homeowners in nearly every neighborhood and every community across the state, including Silicon Valley.
During this very challenging time, CalHFA has been partnering with lenders, servicers, homeowners, loan counselors, and insurers to identify and develop solutions to enable borrowers to keep their home.
The following are brief summaries of the programs CalHFA will implement under the Keep Your Home Program. These programs were approved by the U.S. Treasury on June 23rd 2010, and are final.
You can find here
a list of participating servicers and programs that are currently available to distressed home owners.
1/ Unemployment Mortgage Assistance (UMA)
This program intends to assist homeowners who have experienced involuntary job loss.
UMA will provide temporary financial assistance in the form of a mortgage payment subsidy of varying size and term to unemployed home owners who wish to remain in their homes but are in imminent danger of foreclosure due to short-term financial problems.
These funds can provide up to six months of benefits with a monthly benefit of up to $3,000 or 100% of the existing total monthly mortgage, whichever is less.
2/ Mortgage Reinstatement Assistance Program (MRAP)
This program intends to assist homeowners who have fallen behind on their mortgage payments due to a temporary change in a household circumstance.
MRAP will provide limited financial assistance in the form of funds to reinstate mortgage loans that are in arrears in order to prevent potential foreclosures. These funds can provide benefits of up to $15,000 per household.
3/ Principal Reduction Program (PRP)
This program intends to assist homeowners at risk of default because of an economic hardship coupled with a severe decline in the home’s value.
PRP will provide capital to reduce outstanding principal balances of qualifying borrowers with negative equity. Principal balances will be reduced in an effort to prevent avoidable foreclosures and promote sustainable home ownership.
The principal reduction program will most likely be a prelude to loan modification. Servicers that contribute through matching funds increase the benefit for homeowners.
4/ Transition Assistance Program (TAP)
This housing program intends to promote community stabilization by providing homeowners with relocation assistance when it is determined that they can no longer afford their home.
TAP will be used in conjunction with a servicer-approved short sale or deed-in-lieu of foreclosure program in order to help homeowners transition into stable and affordable housing.
Homeowners will be responsible to occupy and maintain the property until the home is sold or returned to the servicer as negotiated. Funds will be available on a one-time only basis.
III - FHA and VA Pre-Foreclosure Sale Programs
A number of housing programs are available through the Federal Housing Administration (FHA) to avoid the short sale of the foreclosure of your home.
The Pre-Foreclosure Sale (PFS) Programs allow the mortgagor in default to sell his/her home and use the net sale proceeds to satisfy the mortgage debt even though these proceeds are less than the amount owed.
If you own a home with a mortgage insured by the Federal Housing Administration (FHA) and you are finding it difficult to make your mortgage payments or you are in default on your mortgage payments, you may be able to take advantage of the FHA Pre-Foreclosure Sale (PFS).
It allows you to sell your home at its current value and avoid foreclosure, even if the sales proceeds will not be enough to pay off your mortgage debt in full. This allows you to transition to more affordable housing while avoiding a foreclosure. (Ref: Mortgagee Letters 2003-19 and 2008-43).
To participate in the program, homeowners must be willing to make a commitment to actively market their home for a period of 3 months, during which time their mortgage lender delays foreclosure action.
Homeowners who successfully sell their property at near the present fair market value within the required time may be eligible to receive a cash payment from FHA of up to $1,000 to help them transition to more affordable housing arrangements.
If the property does not sell, the homeowner can choose to deed the property to the mortgage lender (deed-in-lieu of foreclosure).