Traditional loan modifications, including the federal Home Affordable Modification Program (HAMP) have failed miserably to relieve struggling homeowners of mortgage payments they simply cannot afford. The largest lender in the program, Bank of America, has completed modifications for fewer than 2 percent of the 200,000 borrowers it has enrolled! Foreclosures continue to climb. I recently attended a conference which stated that of the 1.1 million foreclosures last year – only 30% of them were ever listed first as a short sale. People just don’t know there are other options out there. Fortunately, the United States Department of Treasury is launching a new TV ad campaign to help raise awareness that are several ways homeowners can avoid foreclosure.
HAMP receives most of the mortgage modification attention because it focuses on reducing principal payments for family’s trying to stay in their homes. However, another federal program aimed at helping stave off foreclosure by reducing interest rates has received less publicity but appears to be producing results that HAMP can only dream of. I’d always thought to myself, what about people who are making their payments but got stuck in high interest ARM loan? Enter HARP. The Home Affordable Refinance Program is designed to help people who can’t do a traditional refinance because their home has lost value. Borrowers must be current with monthly payments. According to a Charlotte Observer article, last month, the U.S. Treasury Department reported that HARP has enabled more than 4 million borrowers to refinance, with an estimated average savings of $150 per month. HARP can mean getting a lower interest rate, which lowers payments. The refinancing program also can get people out of interest-only loans, which typically call for increased future payments or a balloon.
If you can’t refinance because your home is worth less than you owe, the Home Affordable Refinance Program might help. Learn more and check your eligibility at www.makinghomeaffordable.gov. You can also find information here about other programs such as HAFA – which is the government program which allows you to short sale your home and receive financial assistance with your move.