Making Home Affordable

Calendar September 19, 2009 | Posted by Staff

Many American home owners are currently experiencing economic distress because of the the current recession. For some people, the situation is so dire they risk losing their homes. To help ensure those people are able to remain in their homes the federal government has introduced a new Financial Stability plan with the aim of supporting them during these difficult times. A crucial component of the plan is the Making Home Affordable initiative.

This plan is designed to improve the foundation of the economy by quickly boosting the housing market. The goal of the plan is to help between 6 and 10 million home owners stay in their homes by reducing monthly payments. The program utilizes two types of mortgage restructuring programs; mortgage refinance and mortgage modification. The government has committed up to $75 billion dollars to fund these programs.

The mortgage refinancing will be administered according to the terms set forth by the Home Affordable Refinance Program, or HARP.  Mortgage refinance is when a borrower renegotiates and entirely new mortgage and uses the proceeds to pay off the balance of the current mortgage. The HARP program will give up to 5 million mortgage holders with loans guaranteed by Fannie Mae or Freddie Mac the chance to refinance their mortgages. By refinancing borrowers receive lower monthly payments, allowing them to keep their homes.

The loan modifications will be organized through the Home Affordable Modification Program, or HAMP. This program is estimated to help up to 4 million American home owners get their existing mortgage agreements modified. Loan modification is when borrowers and lenders agree to alter only specific aspects of an existing loan agreement. Unlike refinance which is a whole new loan, modification changes only one or at most several terms of a contract. This is often simpler with less requirements and paperwork to complete. By modifying loan agreements to include reduced monthly payments foreclosures can be prevented.

If you are a homeowner there is a good chance that you are eligible to receive government funds. You may be able to reduce monthly payments and improve the terms of an existing loan through refinancing or modification. To find it if you are eligible for either HARP or HAMP inquire with your mortgage lender. They will have all the relevant information regarding those programs and how to access public funds.

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