Changes to make the home affordable

The government first launched its Making Home Affordable programs in 2009 in an effort to help struggling homeowners. As foreclosures and mortgage defaults continue to rise in recent years, the programs included in the MHA programs have been reviewed. In hopes of reaching more homeowners and beginning a recovery process in the mortgage industry, many of the MHA’s programs have been modified to better accommodate the realities of homeowners’ struggles.

Affordable Alternatives to Foreclosure

The Home Affordable Foreclosure Alternatives program was originally designed to help homeowners avoid foreclosure by securing a loan modification or short sale option. While the program was considered successful by some, HAFA did not achieve its intended effects, leaving many homeowners without the help they needed. Starting June 1, 2012, the Home Affordable Foreclosure Alternatives program will include more benefits for homeowners in an effort to bring about a greater sense of change in the industry.

One of the biggest changes is the extension of the program through the end of December 2013. Homeowners will now have an additional 18 months to apply for and receive assistance under the HAFA program. The program also removed two requirements that had previously disqualified many otherwise eligible homeowners. Owners are no longer required to have occupied the residence for at least 12 months prior to applying for the program or have a mortgage payment of less than 30% of their gross monthly income to qualify. Additionally, homeowners may receive a status code 13 (paid off or closed) on their credit report instead of receiving a negative “paid off” or “satisfied” notice.

Affordable Housing Refinance Program

The Affordable Home Refinance Program has been one of the most disappointing programs in the Making Home Affordable initiative in terms of outreach. Many homeowners have been denied refinancing opportunities as a result of less-than-perfect credit, a home with underwater status, or as a result of missed payments. The HARP 2.0 program has been revised to remove some of these disqualifying conditions. The new HARP program has removed the loan-to-value limit, allowing homeowners whose outstanding mortgage balance exceeds 25% of the home’s value to qualify. Homeowners will no longer be automatically denied simply because they owe more than 25% of the home’s value. In addition, reductions in out-of-pocket costs and appraisal requirements have been implemented in an effort to include more homeowners who cannot afford the additional expenses of refinancing.