Government Programs


The US Government created a comprehensive plan to address the current
economic crisis and help prevent the destructive impact of foreclosures on families,
communities, and the national economy.

The plan included the creation of the Making Home Affordable Program. The
primary focus of the program is to offer assistance to as many as 7 to 9 million
homeowners and either make their mortgages more affordable or offer situational
alternatives to foreclosure. A brief summary of the program follows:

1. The Home Affordable Modification Program (HAMP)

HAMP is designed to aid 3 to 4 million at-risk homeowners to avoid
foreclosure by reducing monthly mortgage payments. The program ends in
December of 2012. In order to qualify, participants must meet the following

  •  Mortgage must be over 31% of the borrowers monthly gross income
  •  Must live in property (1-4 units)
  •  Less than $729,000 on their 1st/2nd loans
  •  Loan originated before January 1, 2009
  •  Current or mortgage pmt can be late without Notice of Sale being processed
  •  Must have a financial hardship (i.e. job loss, reduced income, divorce, etc.)

Visit to apply.

2. The Home Affordable Refinance Program (HARP)

HARP is designed to aid 4 to 5 million homeowners who have a solid
payment history on an existing mortgage owned by Fannie Mae or Freddie Mac.
Normally these borrowers would be unable to refinance because their homes have
lost value thereby pushing their current loan-to-value ratios above 80%. Under
HARF many of the eligible homeowners will be able to refinance their loan up to
125% loan-to-value ratio an take advantage of today's lower mortgage rates or to
refinance adjustable-rate mortgages into a more stable and conventional fixed rate
loan. The HAMP program ends in June of 2010. In order to qualify, participants
must meet the following criteria:

  •  125% loan-to-value ratio maximum (i.e. $200,000.00 loan / $160,000 Property Value)
  •  Allowed up to one monthly late payment
  •  FICO score of 620 minimum
  •  Debt-to-income ratio no more than 45%
  •  No PMI if you don't currently pay PMI insurance
  •  Must be owned by Fannie Mae or Freddie Mac

Visit to apply.

3. The Home Affordable Foreclosure Alternatives Program (HAFA)

A “short sale” is any sale of property in which the lender agrees to accept less
than the balance due on the mortgage in order to avoid the cost of foreclosure. A
“deed-in-lieu” is where the homeowner transfers the deed to the property back to
the lender in exchange for partial or full payoff of the mortgage.

HAFA is available to homeowners who have applied to HAMP (identified
above) for assistance and met HAMP's eligibility criteria but have had no success
with their loan modification. The HAFA program consists of provisions and
incentives for servicers to allow short sales or deeds-in-lieu as positives options for
eligible homeowners in default who wish to avoid foreclosure. Participation in
HAFA cannot save the homeowner from losing their property but it can eliminate
the effects of a foreclosure on the homeowners credit. There are also financial
incentives for participation in the program which include $1,000.00 servicing bonus
for lenders and a $1,500 relocation bonus for displaced homeowners. HAFA
requires that participating lenders agree to suspend all foreclosure sales in good
faith pending the outcome of a short sale or deed-in-lieu transaction.

Participating lenders retain the ability to conduct their own independent
appraisal of the property and approve or deny the transaction. Once approved, the
lender must agree to accept the proceeds from the sale of the house as payment in
full thereby waiving their right to collect the balance of the loan from the

If the property is encumbered by a 2nd mortgage or other subordinate loan,
the lender, servicer, or homeowner participating in the HAFA program is permitted
to negotiate with the owner of the 2nd mortgage or other subordinate loan who may
be allowed to keep up to $3,000.00 from the proceeds of the short sale. The funds
were created to give an incentive for the owner of the 2nd mortgage or other
subordinate loan to participate in the program and waive their right to collect the
balance due on their loans.

HAFA's Short Sale Agreement has certain stipulations for all parties involved.
The agreement requires a deadline for the homeowner to find a buyer and complete
the transaction within 120 days from the date the agreement was mailed to the
homeowner. The lender has the option of extending the deadline for another 245
days not exceeding 12 months. The agreement also mandates that a HAFA
transaction must be “arms-length” and the end buyer must agree to hold the
property for at least 90 days after closing. Finally, the agreement gives the listing
real estate agent the right to an undiscounted 6% commission at closing.

The HAFA program is set to being on April 5, 2010 and all HAFA agreements
must be finalized by December 31, 2012.

Fore more information on the HAFA program, please visit www.hafaprogram.

Program Descriptions herein were taken, in part, from and

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410.420.8910 |

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