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Making Home Affordable

Making Home Affordable is a government sponsored program initiated through President Obama's Financial Stability Plan. The primary goal of this program is to give homeowners struggling to maintain their home mortgage payments the opportunity to refinance or obtain a loan modification.

The Making Home Affordable website offers interactive tools allowing borrowers to quickly determine if they are eligible for home affordable refinance or home affordable modification programs. While the website does not engage in refinancing or modification lending practices, it does provide information and resources to guide borrowers in the right direction.

At present, four options exist to aide homeowners. Home Affordable Refinance Program (HARP) engages in mortgage refinance. In order to qualify for HARP, borrowers must have home loans for one to four unit residential properties which are backed by Fannie Mae or Freddie Mac. Borrowers must be current on their loan; meaning they have not been more than 30 days late on mortgage payments in the previous twelve months. Additionally, the first mortgage cannot exceed 125-percent of the current market value of their home.

Home Affordable Modification Program (HAMP) is an option for borrowers who need to reduce their monthly payment in order to avoid foreclosure. Home affordable loan modifications might be available to borrowers who hold first mortgages equal to or less than $729,750 on their primary residence. Monthly first mortgage payments must be greater than 31-percent of the borrower's gross income. This amount includes principal, interest, taxes, property insurance and homeowner's association dues. HAMP is only applicable to home loans acquired prior to January 1, 2009.

Obama's Making Home Affordable Program is currently in the process of offering a 2nd Lien Modification Program to borrowers with a second mortgage against their realestate. Homeowners who qualify for HAMP will automatically be eligible for modifying the second mortgage under the 2MP program. According to MakingHomeAffordable.gov, the 2MP program is expected to be implemented in the first quarter of 2010.

In April 2010, foreclosure avoidance options will be offered through the Home Affordable Foreclosure Alternatives Program. Some home loan service providers are already participating in HAFA by allowing borrowers to offering short sale and deed in lieu of foreclosure.

Short sale means the property is sold for less than the amount owed against the home loan. Borrowers must work with their lender's loss mitigation department to obtain short sale approval. The process typically takes four to six months to complete and borrowers must meet eligibility requirements.

The most crucial aspect of obtaining short sale approval is the property cannot be in foreclosure. Therefore, borrowers who are delinquent by 31 days or more should contact their lender immediately to discuss the short sale option.

With deed in lieu of foreclosure, homeowners return their property to their lender and walk away. It is important to note that short sales and deed in lieu transactions might hold borrowers responsible for any deficiencies between the sale price of the property and loan balances.

Many lenders obtain deficiency judgments against homeowners that enter into foreclosure alternatives. Deficiency judgments remain on credit reports until fully repaid and can prohibit borrowers from obtaining any type of credit for years to come. Careful consideration should be given before entering into foreclosure alternatives.

We invite you to browse our home mortgage library and become informed about the various mortgage refinance and loan modification options. Learn about the pros and cons of filing bankruptcy to prevent foreclosure, short selling real estate, and obtaining a deed in lieu. Education is the key in finding which option is best suited for your needs.