The Making Home Affordable Program is a government-sponsored refinance and loan modification program to help struggling homeowners keep their home. The Making Home Affordable Program includes the Home Affordable Modification Program (HAMP) and the Home Affordable Refinance Program (HARP). The Making Home Affordable Program also includes the Home Affordable Foreclosure Alternatives (HAFA) Program for individuals who wish to transition to more affordable housing.
Home Affordable Modification Program (HAMP)
To qualify for HAMP, a homeowner must:
• Own a one to four-unit home that is their primary residence
• Have received their mortgage on or before January 1, 2009
• Have a mortgage payment (including taxes, insurance, and homeowners’ association dues) that is more than 31 percent of their gross (pre-tax) monthly income
• Owe an amount that is less than or equal to $729,750 on their first mortgage for a one-unit property (there are higher limits for two or four-unit properties)
• Have a documented financial hardship
To apply for HAMP, homeowners must submit an Initial Package to their mortgage servicer, which includes:
• A complete Request for Modification and Affidavit
• A complete Tax Authorization Form (IRS Form 4506T-EZ)
• Proof of Income
Mortgage servicers will determine whether homeowners qualify for a HAMP modification. Homeowners who qualify must complete a trial period of three or four months to demonstrate that they will be able to make reduced payments on time before their mortgage will be permanently modified.
Home Affordable Refinance Program (HARP)
To be eligible for HARP:
• The current loan-to-value ratio must be greater than 80 percent
• The borrower must be current on the mortgage at the time of the refinance, with a good payment history in the past 12 months
• The mortgage must be owned or guaranteed by Freddie Mac or Fannie Mae and must have been sold to them on or before May 31, 2009
• The mortgage cannot have been refinanced under HARP previously unless it is a Fannie Mae loan that was refinanced under HARP from March to May 2009
Home Affordable Foreclosure Alternatives (HAFA) Program
HAFA provides two options for individuals transitioning out of their mortgage: a short sale or a Deed-in-Lieu of Foreclosure. In either instance, HAFA offers benefits that make the transition as favorable as possible. Unlike conventional short sales, a HAFA short sale completely releases you from your mortgage debt after selling the property. Also, HAFA has a less negative effect on your credit score than foreclosure or conventional short sales.
To be eligible for HAFA:
• You must have lived in the home within the last 12 months
• You must have a documented financial hardship
• You must not have purchased a new house within the last 12 months
• Your first mortgage must be less than $729,750
• You must have 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, forgery, money laundering, or tax evasion in connection with a mortgage or real estate transaction
Contact an experienced real estate attorney if you need assistance with your real estate matters.