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U.S. housing prices began a sharp decline in 2006. A global financial crisis struck two years later, leading to high unemployment and lower incomes for millions of Americans. Many homeowners struggled to make their mortgage payments. In response, the federal government created a variety of mortgage relief programs to help at-risk homeowners modify or end their mortgages.
Modification Programs Reduce Monthly Payments
The Home Affordable Modification Program helps homeowners whose mortgages are backed by the federal government. Eligible homeowners can lower their monthly mortgage payment to 31 percent of their monthly income.
The Second Lien Modification Program helps homeowners who are having trouble paying their mortgages because they also have a home equity loan or other type of second lien on their homes. The Principal Reduction Alternative program helps homeowners whose homes are worth much less than the amount they owe to their mortgage lender. The program works with lenders and investors to reduce a homeowner’s monthly payments.
Refinancing Programs Lower Interest Rates
Two federal mortgage refinancing programs help homeowners get less-costly fixed-rate mortgages. The Home Affordable Refinance Program is aimed at homeowners who are not behind on their mortgage payments but have not been able to refinance their home loan through lenders. The Federal Housing Administration’s Short Refinance program assists homeowners who are not behind on their mortgages but who owe more than their homes are worth.
Other Programs Help Certain Homeowners
Unemployed homeowners may qualify for the Home Affordable Unemployment Program. This program reduces or postpones monthly mortgage payments for a year or more. The Federal Housing Administration (FHA), the Department of Veterans Affairs, and the Department of Agriculture have special mortgage relief programs for homeowners whose mortgages are guaranteed by these federal agencies.
The U.S. Treasury’s Hardest Hit Fund helps homeowners in the states most affected by the financial crisis. Federal funds help local agencies in 18 states and the District of Columbia provide mortgage relief to residents.
Foreclosure Programs Make Ending a Mortgage Easier
The Home Affordable Foreclosure Alternatives Program helps struggling homeowners end their mortgages. The program works with lenders to transfer ownership to the lender or to allow the homeowner to sell the home for less than the amount owed on the mortgage. It also provides $3,000 in aid for moving and relocation expenses.
A Lawyer Can Help
The law related to mortgage difficulties and mortgage relief programs is complicated. Plus, the facts of each case are unique. This article provides a brief, general introduction to the topic. For more detailed, specific information, please contact a real estate or bankruptcy lawyer.