The federal government's Making Home Affordable program has been closed – at least for now. During its seven-year life, it helped more than 1.8 million households to avoid foreclosure and remain in their homes.
Perhaps the biggest loss arising from the shuttering of Making Home Affordable was the Home Affordable Modification Program (HAMP). This program allowed homeowners who had fallen behind with their mortgage payments to modify their loans in a way that rolled up arrears and reduced those payments – typically by $500 a month. And that, of course, made the prospect of remaining in their homes more affordable and sustainable.
The loss of HAMP undoubtedly makes life more challenging for those in danger of foreclosure. But, if you are one of the many people struggling to remain in your home, take heart. In many cases, there are still things you can do to help yourself. Read on to learn more about those. But first, let's check out who used to be eligible for HAMP ...
Those Who Used to Benefit from Making Home Affordable
If you were used to seeing your loan applications declined, HAMP was like a breath of fresh air. The things that made other lenders turn you down frequently made no difference to your getting approved for these mortgage modifications. In fact, some of them made it more likely you'd get a green light.
Bankrupt? No problem. In foreclosure or due in court soon? Fine. Already 60+ days in arrears or soon likely to be so? You could still be approved.
But that was then, and this is now. If you got your HAMP application in before the program closed on Dec. 30, 2016, your case should still be processing if it hasn't already been closed. But if you missed that deadline, you can no longer apply.
Something Better in the Future?
Might, at some future date, the Trump administration reinstate the old Obama-era program, or introduce something better? Who knows?
Either way, you personally are almost certainly in urgent need of help, and won't have the luxury of waiting around for a new program. So for now, you're likely on your own ...
Remaining State and Federal Help
The Hardest Hit Fund
If you're lucky enough to live in one of the 18 states, plus Washington DC, that benefit from the federal Hardest Hit Fund (HHF), you may still be eligible for government assistance.
According to the U.S. Treasury, "HHF provides funding for state [Housing Finance Agencies] HFAs to develop locally-tailored foreclosure prevention solutions in areas that have been hard hit by home price declines and high unemployment."
Each state agency establishes its own programs and sets its own rules. You can find details about your stat's available programs, if any, by clicking through on the HHF page on the U.S. Treasury website.
Even if your state doesn't receive federal funds through HHF, it is worth checking with your local housing finance agency (it may be called something a little different where you live) to see if it operates any programs that could help you.
Home Affordable Refinance Program
The Home Affordable Refinance Program (HARP) may be able to help you if you've so far managed to keep up with your mortgage payments. You must have been current with those for at least six months prior to your application.
But, HARP is a straightforward refinancing and can reduce your monthly payments only if you're currently paying a higher mortgage rate than necessary. So it's very different from HAMP.
Making Home Affordable Yourself
Pick Your Battles
One of the worst things about seemingly unmanageable debt is the speed with which it can sap your morale. The stress and worry can quickly turn people who think of themselves as fighters into quitters.
But picking a fight you can't win is counterproductive. So you need to ask yourself:
- Am I going though a financial bad patch (perhaps due to sickness, unemployment, or a one-time hit to my budget) from which I realistically expect to recover soon?
- Or, have things gotten so bad that (absent HAMP) there's no realistic way I can hope to stay in my home?
Whichever of those you choose, there are things you can do to make your life easier. So read on, even if your situation's hopeless.
But let's start with those who think they might be able to stay in their homes ...
Today's Tough Times Are Temporary
Here are some key steps you need to take:
- Get free foreclosure avoidance counseling from a professional approved by the U.S. Department of Housing and Urban Development (HUD). You can find one close to you through this HUD web page.
- Don't respond to ads and online invitations from paid-for counselors who make big promises. Presumably, some must be honest, but many are sharks who will leave you worse off than ever.
- Talk to your lender soon. The longer you leave getting in touch, the more difficult your conversation might be. Most lenders want to help those with a realistic case to make.
- If necessary, make an initial call, explaining you're taking the situation extremely seriously, and are pulling together everything you need to fully inform your lender. Promise to call back within a reasonable time – and then do so.
- Chill before you dial. This is your opportunity to win over your lender. So be charming and polite no matter how difficult the conversation. Show you're serious about resolving the problem and are ready to work with your lender.
- Prepare for that call. Gather together all the information that will likely be requested and read through it first. Be ready to answer questions about any assets and savings you have as well as your non-mortgage debts.
- Explain why you think you'll be on your feet again soon. For example, share your doctor's prognosis if you've been sick, or detail why you think you'll get a new job soon if you're currently unemployed.
- Be scrupulously honest in your answers to your lender's questions. Materially misleading it could constitute fraud. And you'll probably have to provide supporting documentation anyway.
- Know what you want. You may need "forbearance" (a period of time during which your mortgage payments are reduced or suspended) or a "repayment plan" (a schedule whereby you pay down your arrears while continuing to make monthly payments).
- Create a new household budget that shows you'll be able to catch up with payments once you're back on your feet.
Learn more about Interacting With Your Mortgage Company and Housing Counselor.
Moving Out Is Inevitable
If you're convinced that you have no hope of remaining in your home, your strategy should be to move out on your own terms – with your dignity and self-respect intact.
But before you do that, you should follow the advice in one of the above bullet points: Get free foreclosure avoidance counseling from a professional approved by the U.S. Department of Housing and Urban Development (HUD). You can find one close to you through this HUD web page. Who knows? Maybe things aren't as bad as you fear.
Once you are sure that you will be required to move, you probably have two main options, which you can discuss with your lender:
- Short sale – Your mortgage lender agrees you can sell your home for less than your mortgage balance and then allows you to walk away free and clear.
- Deed-in-lieu of foreclosure (DIL) – You transfer the ownership of your property to your lender in exchange for your being released from your loan and payments.
While neither of these is desirable, and both are likely to cause damage to your credit score, they are much better than the misery of a full foreclosure.