Types

• Programs such as the federal government's Home Affordable Modification Program (HAMP) helps three types of owners: homeowners who are current on their mortgage payments, homeowners who are behind on their mortgage payments, and homeowners who can no longer afford a mortgage. The program is available through the U.S. Department of the Treasury and the U.S. Department of Housing and Urban Development (HUD), and is part of the government's Homeowner Affordability and Stability Plan (HASP). HASP was introduced in 2009 to provide financial help for homeowners struggling with mortgage payments (See Resources). HAMP programs such as the Home Affordable Refinance Program (HARP) are available for homeowners who are current on their mortgage payments but wish to refinance their homes. The Second Lien Modification Program (2MP) helps homeowners who are unable to pay their mortgage due to a second lien.
  
  

Eligibility

• By participating in HAMP, homeowners are eligible to reduce their monthly mortgage payments by up to 31 percent of their gross income. HAMP participants must own a one- to four-unit home that is their primary residence and have a mortgage that went into effect on or prior to January 1, 2009. In addition, their mortgage must be more than 31 percent of their pre-tax monthly income. Applicants' outstanding loans must also fall under the debt limits established by the program. For example, homeowners of one-unit properties must owe an amount equal to or less than $729,750 to participate in HAMP. The HARP program requires that participants are current or no more than 30 days late on their mortgage payment. Additionally, their home loans must be owned or guaranteed by lenders Fannie Mae or Freddie Mac (see Resources).
  
  

Benefits

• Homeowners who qualify for debt help can negotiate lower mortgage payments and lower mortgage interest rates and, and receive relocation assistance for foreclosures. Some of the benefits that homeowner debt help provides include permanent loan modifications and extensions. For example, HAMP reduces participants' mortgage interest rates to as low as 2 percent and extends mortgage terms to as long as 40 years. Homeowners can also get a portion of their mortgage principal forgiven based on lender requirements.
  
  

Considerations

• In addition to seeking out help through government homeowner programs such as HAMP and HARP, HUD encourages homeowners to contact their lenders to avoid foreclosure. Homeowners should research their state's foreclosure laws and review their bank documentation to find out their mortgage rights and possible plans of action. Residents can also contact their state's government housing office for additional information or take advantage of HUD's free housing counseling service (See Resources). HUD counselors also provide homeowners with legal information and housing advice, as well as represent homeowners during negotiations with bank lenders.