Changes Made to Federal Foreclosure Avoidance Programs (Monitor: April 5, 2010)
With many homeowners across America continuing to feel the effects of the housing and economic crisis, the Obama administration has announced adjustments to the Home Affordable Modification Program (HAMP) and to refinancing programs run by the Federal Housing Administration (FHA). According to a statement from the U.S. Department of The Treasury, the changes are intended to expand flexibility for mortgage servicers and originators to assist more unemployed homeowners.
The MCUL is housing documents that explain the changes on its Making Home Affordable resource page under the “Loan Modification” heading – these include lists of the improvements for HAMP and the FHA programs, two examples of cases, and a consumer FAQ.
A few of the alterations to HAMP include:
• Borrowers in active bankruptcy must be considered for HAMP upon request
• Expansion of HAMP to include homeowners with FHA loans
• Mortgage payments reduced to affordable level for a minimum of three months, and up to 6 months for some borrowers, while eligible homeowner looks for new job
Changes to the FHA refinancing programs were made to “encourage responsible restructuring” and increase the program’s transparency, as FHA will now publish data on the number of loans, the average percentage written down and quantity of principal reduced quarterly.
The statement noted that costs will be shared between the private sector and the federal government; the federal cost of these changes will be funded through the $50 billion allocation for housing programs under the Troubled Asset Relief Program. Read the full statement here.