- June 8, 2015
- Thomas Adam
There have always been legal and practical options for those having difficulty making their mortgage payments. However, during the housing crisis, legislators and agencies added additional options and programs designed to help struggling homeowners. As the housing market and economy continue to recover, some of the relief programs and options are beginning to reach their deadlines.
Two of the largest such programs, Home Affordable Modification Program (HAMP) and the Home Affordable Refinance Program (HARP) were getting close to such deadlines. However,recently, the Federal Housing Finance Agency (FHFA) announced an extension of both borrower relief programs through 2016. The FHFA noted that it anticipates this will be the final extension of the programs, both of which began in 2009 and have helped millions of borrowers since that time.
Florida homeowners that are struggling to make mortgage payments should consider whether one of the programs may provide the help they need while they are still available.
Home Affordable Modification Program (HAMP)
HAMP is a program that modifies mortgages for homeowners that are experiencing long term financial hardship. The modifications are made to the terms of an eligible homeowner’s original mortgage. The goal is to reduce payments so they don’t exceed 31% of the homeowner’s gross income. This reduction may be achieved through a few different types of modifications, depending on the homeowner’s situation, including by extending the mortgage term, temporary or permanent interest rate reductions, and changing the mortgage type from adjustable rate to fixed rate.
All Fannie Mae and Freddie Mac owned loans are eligible for the HAMP program and additionally, over 100 mortgage companies have opted in, agreeing to participate. HAMP continues to be an available option for delinquent homeowners, however, it is generally best to apply as soon as you become in danger of falling behind rather than waiting until you are behind.
Home Affordable Refinance Program (HARP)
HARP is a program that helps borrowers pay their mortgage and stay in their home through refinancing with terms more favorable to the homeowner. Refinancing means that the homeowner and the lender enter into a new mortgage agreement that replaces the old agreement. It’s typically used to reduce interest rates. Refinancing is, of course, available outside of the HARP program, but for those whose homes are underwater (mortgage principal exceeds value) or have little equity, are often denied when they apply for traditional refinancing.
The FHFA estimates that more than 600,000 borrowers across the country would still benefit from HARP with 81,000 of those borrowers located in Florida. HARP is only available to those who have not made a late mortgage payment within the 6 months prior to their application so it’s very important to apply as soon as difficulties emerge rather than waiting until you cannot make a payment.
Another restriction on HARP is that it is only available to homeowners who have Fannie Mae or Freddie Mac backed mortgages. However, there are similar programs available for a number of other types of mortgages.
Learn About Your Options
f you’re behind on your mortgage or want to learn more about the Mortgage Relief Act Extension, contact the Jacksonville foreclosure defense lawyers at Adam Law Group today.