Avoiding Foreclosure

Monday, February 6th, 2012

Foreclosure can happen to anybody in any financial income bracket. Also, it is not something that you should hide from because it never goes away.

There are many ways to avoid foreclosure but you must act on time. Once you miss your first payment it gets hard to catch up and becomes overwhelming

Foreclosure is when a Lending institution repossesses your home because of unpaid mortgage payments. The mortgage company does not typically begin the official foreclosure proceedings until you are 3-4 months past due. The duration of proceedings depends on your State’s Foreclosure laws.

The Obama Administration has put a number of programs in place to help homeowners who are at risk of foreclosure and struggling to make their monthly mortgage payments. Homeowners are encouraged to contact their lenders and loan servicers directly to inquire about foreclosure prevention options available to them.

Programs to Help Homeowners Avoid Foreclosure Include:

.The Making Home Affordable © (MHA) Program: helps homeowners avoid foreclosure, helps stabilize the country’s housing market, and also helps improve the nation’s economy. Homeowners have the opportunity to lower their monthly mortgage payments and obtain a loan at a lower rate. There are also choices available for unemployed homeowners and homeowners who owe more than their homes are worth.

.Home Affordable Modification Program (HAMP): lowers a homeowner’s monthly mortgage payment to 31 percent of their verified monthly gross (pre-tax) income. The HAMP modification usually results in a 40 percent drop in their monthly mortgage payment.

.Principal Reduction Alternative (PRA): was designed to help homeowners whose homes are worth less than they owe, by encouraging servicers and investors to reduce the amount you owe on your home.

.Second Lien Modification Program (2MP):  this program was designed for homeowners whose first mortgage was modified under HAMP SM and they have a second mortgage on the same property. The homeowner might be eligible for a modification or principal reduction on their second mortgage under 2MP.

.Home Affordable Refinance Program (HARP): is designed to help homeowners who are current on their mortgage but have been able to refinance because the value of their home has declined.

.Home Affordable Unemployment Program (UP): designed for individuals who are unemployed and are having a tough time making their mortgage payments. The program provides a temporary reduction or suspension on your mortgage payments for at least twelve months while you seek re-employment.

.FHA Forbearance for Unemployed Homeowners: Federal Housing Administration (FHA) requirements now require servicers to prolong the forbearance period for unemployed homeowners to 12 months. It also requires servicers to extend the forbearance period for FHA borrowers who qualify for the program from four months to twelve months also removing any upfront hurdles to make it easier for the unemployed borrowers to qualify.

.Home Affordable Foreclosure Alternatives (HAFA): If your mortgage payment is unaffordable and you wish to transition into more affordable housing, you may be eligible for a short sale or deed-in-lieu of foreclosure through HAFA SM.