Nearly one in 10 American households with a mortgage are behind on their payments, according the Mortgage Bankers Association.  In order to help, the Obama Administration introduced in 2009 the Making Homes Affordable Program (HAFA), a plan to help struggling homeowners get relief and avoid foreclosure.  It provides various kinds of relief for homeowners in trouble.

If you are underwater on your house (owe more than your house is currently worth) and your mortgage loan is insured by Freddie Mac or Fannie Mae, the Home Affordable Refinance Program (HARP). The HARP program provides a way for you to refinance your home at a lower interest with more affordable payments.

Eligible loans include those whose mortgage does not exceed 125% of the current market value of the property. For example, if your property is worth 0,000 but you owe 0,000 or less on your first lien mortgage you may qualify. The current market value of your property will be determined after you’ve applied.

In order to qualify for the HARP you must be able to show the following: You are current on your mortgage payments. You can’t be more than 30 days late for the past 12 months; Your loan is federally guaranteed: which means you have a loan owned or guaranteed by Fannie Mae or Freddie Mac;:  You have to be able to demonstrate payment affordability — that you can afford to make the payments on the new modified loan.

The Home Affordable Modification Program (HAMP) provides eligible homeowners the opportunity to modify your mortgage loan terms to make it more affordable.  Over one million homeowners have already gotten help under this program. The program is on track to offer help to 3 to 4 million homeowners by 2012.

Loan Modifications, under HAMP, are changes to your loan agreement outside the original terms of the contract agreed to by the lender and you due to hardship. A Loan Modification is a permanent change in one or more of the terms of your loan, allowing your loan to be reinstated, and resulting in a payment you can afford.

As part of the Modification Agreement, your account will be brought up to date as soon as the terms of the modification are negotiated and accepted. Your payments get more affordable, and you don’t have to default on your loan. A home Loan Modification will change your existing mortgage note and can give you and your family the fresh start you deserve.

However, in addition to other qualifications, you must be able to document that you and your family have suffered a hardship that caused you to fall behind and that once the loan is modified you will be able to pay monthly. Examples of compelling hardship are: death of spouse, co borrower or family member; divorce/separation; illness; job relocation; loss of income; or military service.

The mortgage loan modification process is very long and tedious due to the amount of information requested by a lender and the amount of time lenders take to analyze that information. Frequently documents are lost or misplaced and have to be re-sent. It is important to keep in regular contact with your lender to make sure the process is progressing.

If you feel that you can no longer afford your home, but want to avoid the negative effects of foreclosure, The Home Affordable Foreclosure Alternatives (HAFA) Program offers homeowners, their mortgage servicers, and investors an incentive for completing a short sale or deed-in-lieu of foreclosure. With these options, under HAFA, a homeowner leaves their home to transition to more affordable housing and alleviate the mortgage debt they owe.

With a Short Sale you and your lender agree that you will list and sell your mortgaged property with the understanding that the net proceeds from the sale may be less than the total amount due on the first mortgage. For example: you bought your house a couple of years ago for 0,000, and decided to take advantage of the mortgage broker’s sales pitch and obtained a 100 percent loan. Now, your house will probably only sell for 0,000. You recently lost your job and cannot afford to continue with the monthly mortgage payments. You have missed a couple of payments and the bank is calling to collect.

If you qualify, HAFA provides streamlined short sale rules and incentives for both borrowers and lenders. But even if you don’t qualify under HAFA, it is still possible to work out a short sale arrangement with you lender

Short Sales Considerations:

You Do Not Qualify For A Trial Mortgage Modification Under The Making Home Affordable Program;
You Did Not Successfully Complete the Trial Period For Their Modification;
Miss At Least Two Consecutive Payments During Their Modification Period;

If the transaction is completed successfully the lender will pay the expenses of the slae including real estate commissions and attorney’s fees.  Many attorneys will take these cases on contingency.

With a Deed In Lieu Of Foreclosure, aka cash for keys, you give your home back to your lender and walk away. This means you return the “deed” in exchange for cancellation of your loan. You give your lender a properly prepared and notarized deed, and the lender forgives the mortgage, effectively canceling any foreclosure action. In order for the Deed-in-Lieu of Foreclosure to work, you must provide a marketable title, free and clear of other mortgages, liens, or other encumbrances.

If you are having difficulty currently or expect to have difficulty in the hear future meeting your mortgage payments, The Most Important Thing Is To Realize That You Have Options And Not Give Up Hope!  There are options available to you.  One good place to start your research is at MakingHomesAffordable.gov. a free government sponsored website about the various Avoiding Foreclosure Alternatives Options. Then contact an attorney licensed in your state who has experience with loan modifications, short sales and other avoiding foreclosure options. Or you can contact me at info@all-things-conflict-resolution-and-adr.com.

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