The US economy is in bad shape, in an effort to help various homeowners who lost their jobs due to the ongoing recession, the Obama government introduced two mortgage relief programmes for the citizens of America. The Two programmes are known as Making Home Affordable (MHA) and Special Forbearance Programme. These programmes have introduced certain mechanisms through which these people can get exemption from making mortgage payments for three to four months. These programmes also restructure the home loans in a manner that home owners may not have to face foreclosure.
The Making Home Affordable programme consists of five different schemes for relieving home owners of financial stress. The Home Affordable Modification Program (HAMP), Home Affordable Refinance Program(HARP), Second Lien Modification Program, Mortgage Forbearance, Home Affordable Foreclosure Alternatives Program.
HAMP is designed to relieve homeowners by reducing their monthly mortgage amount to just thirty one percent of their income before taxes. In order to qualify for HAMP, the mortgage has to be taken on or before January 1, 2009. The mortgage has to be taken for the primary residence of the home owner. The amount of the mortgage should be less than $729,000. The homeowner may be asked to go for a trial where the homeowner has to make timely payments of the reduced mortgage amount. In this case, the period of the mortgage is increased to forty years and the rate of interest is lowered.
Home owners who take the HAMP benefit may also go for the second lien modification program if they have more mortgages to pay back.
Interest rates have fallen dramatically in the last few years. Many people are look for refinancing. Since the value of their property has also depreciated, they don’t qualify for a refinance. In some cases, the principal amount is higher than the home’s current value. HARP can help them refinance their loans.
The mortgage forbearance program allows the home owners exemption from paying their mortgages for a period of three to twelve months. Earlier this exemption was available for a period of three months, but today keeping the current market scenario and the US economy in mind, the US government felt that it was necessary to extend the period.
Even after getting grants from the US Government, some people have come to such dire financial states that they are unable to pay back their mortgages. The Home Affordable Foreclosure Alternatives program allows the homeowners to make a short sale or a deed in lieu of foreclosure. People who have little or no choice are opting for HAFA, as a last resort.
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