For those struggling to keep their homes, it’s a relief to hear that HARP has been extended through December 31, 2018.
Home Affordable Refinance Program (HARP)
The government offers the Home Affordable Refinance Program (HARP) to help you refinance. This is a federal program that was created by the Federal Housing Finance Agency in March 2009 to help underwater and near-underwater homeowners refinance their mortgages. There are various places online where you can see if you qualify for HARP.
It was recently announced that the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, estimates that another 143,000 homeowners can still qualify to take advantage of HARP but have not done so. Because interest rates have remained low enough that refinancing is still viable for many homeowners, the agency has decided to extend the HARP program until December 31, 2018, in an effort to give homeowners one last chance to use this valuable program.
Reason for HARP
HARP, introduced in April 2009, was intended to help borrowers owing more than their home was worth to refinance and take on a loan that offered lower interest rates or more stable payments.
Mel Watt, the FHFA Director described the 3 million HARP refinances as “an important accomplishment” that “represents real help” for borrowers affected by the mortgage crisis. He added, “We are continuing our efforts to make sure that those who can take advantage of this program have the information they need to do so.”
Enhancements Made to HARP
In November 2011 the HARP program was expanded in order to qualify more borrowers, and increased the volume of HARP refinances in 2012 as well as after the deadline was extended in 2013.
Enhancements included a higher loan-to-value ratio, as well as greater use of certain automated valuation models in lieu of an appraisal.
Typically, you will need to provide the following to see if you are eligible:
- Your most recent income tax return
- Information about any junior lien mortgage on the house
- Account balances and monthly payments for all of your debts
HARP can be a great option for struggling homeowners.
A repayment plan is an agreement between a homeowner and the mortgage lender where the homeowner pays the past due amount that is owed. It is used to help resolve delinquency. Typically the past due amount is added on to mortgage payments—over a specified time period in order to bring the mortgage current. Essentially, a repayment plan allows a homeowner to catch up on your past due payments over an extended period of time. This is less damaging to a homeowner’s credit score than a foreclosure and also allows the homeowner to stay in their home while avoiding foreclosure.
A forbearance is when a mortgage company temporarily suspends or reduces a homeowner’s monthly mortgage payments for a specified period of time in order allow a homeowner to get back on solid financial footing. Tax, insurance, escrow, or impound amounts can be suspended for a set period of time, which will help a homeowner stay in their home and avoid forbearance. This option is also less damaging to your credit score than a foreclosure.
Your lender will need to determine if you are eligible for a forbearance, but often that eligibility is based on a loss of income due to a number of things, including: medical illness, death of a co-borrower, natural disaster, or unemployment. All of these circumstances must have a clear end so that the lender can set an amount of time.
If You Get Foreclosed On
Foreclosure is a frightening thing to face. But there are things you can do to avoid it. Here’s some more information on what foreclosure is and what you can do to protect yourself and your family.
Foreclosure Is A Process
Foreclosure is a series of events during which a lender attempts to recover the balance of a loan from a borrower who is unable to pay. There are phases to foreclosure process that are determined by the state you live in. You should consult a foreclosure lawyer to help you understand your rights during this process. They’ll be able to advise you on your state’s laws.
If You Have to Sell
If you have to sell your home, chances are you’ll have a better chance of selling it if it has been kept in good condition. If you are no longer able to afford your home and are facing foreclosure, you might be eligible for what is called a “Short Sale.” Short sales are better than foreclosures.
What is a “Short Sale”?
A “Short Sale” (also known as a pre-foreclosure sale) is when you sell the home for less than the balance that remains on the mortgage. Even if you don’t think your home is able to be sold you might still qualify for this type of sale. Once your mortgage company agrees to the Short Sale, you’re able to sell the home and then pay off your mortgage (or at least a portion of the mortgage) will the proceeds.
You might be eligible to a Short Sale if :
- You’re not eligible for a refinance or modification of your mortgage
- You are dealing with a long-term hardship
- You have fallen behind on your mortgage payments
- You’re “upside-down” on your home, meaning you owe more than it is worth
- You have tried selling, but have been unable to sell your home for a price that covers what is owed on the mortgage
- You are no longer able to afford the home and are ready and need to leave it
A short sale allows you multiple benefits, including:
- The ability to eliminate or reduce your mortgage debt
- Avoid foreclosure
There are steps you can take to avoid home foreclosure. You should immediately contact your lender if your circumstances change due to a loss of job or other unforeseen circumstance and you’re unable to pay. Remember that mortgage lenders would rather you stay in the home, rather than try to recoup the money on the loan via a foreclosure sale. Because of this, they are willing to work with homeowners that are willing to work with them. A lot of times mortgage lenders will still work with you even if you’ve missed three monthly mortgage payments.
The idea of losing your home to foreclosure is devastating. A lawyer can help you avoid foreclosure through looking at various viable options including a home loan modification or even bankruptcy in order to get you back on solid financial footing.
Working with an Attorney
If you are unable to keep up with your mortgage payments, you’ll want to contact a lawyer that can help you avoid home foreclosure. It is easy to feel helpless in a situation like this. The right lawyer can help save your home using a number of legal options, including Chapter 13 bankruptcy. At the law offices of RHM LAW LLP, we help the people throughout the San Fernando Valley, Los Angeles, Riverside, San Bernardino and Orange counties to avoid home foreclosure and get the debt relief they deserve. If you need to avoid home foreclosure and you have decided to pursue bankruptcy as an option or home loan modification, we will help you save your home.