Let me be clear. I am no fan of Barack Obama. I am happy we have a pro-Israel, pro-growth government after something very different the last eight years. Having said that, there are some programs implemented by the previous president that have been beneficial to millions of homeowners and are at risk of ending. If you can benefit from one of these programs you should act soon for it is possible these programs could end or change.
The recent recession left millions of people with financial challenges that caused many to lose their homes and go into bankruptcy. Several programs were implemented that helped millions of homeowners save their homes by obtaining new, more flexible terms on their mortgages. These programs were instrumental in stabilizing the housing market. There are two specific programs that may be at risk with a Republican congress.
HAMP (Home Affordable Modification Program): During the recession, many people couldn’t continue making payments on their mortgages for any number of reasons. Once they wanted to begin making payments, they found themselves in default with lenders unwilling to accept new payments. Furthermore, due to non-payment, weakened credit scores and reduced value on the home, they were not eligible to refinance. The Hamp program allows homeowners who are in default to apply for new payments often with a reduced rate and longer maturity. The rate could be as low as 2 percent and at times a portion of the principal becomes interest free. To apply, a borrower must contact their bank and submit an application. While it is possible to pay for an attorney to help with the process, it is also possible to seek assistance for free from a HUD-approved counseling agency. These entities are compensated by the government, so it is helpful to have this free advice. If you are behind on payments, now is the time to explore this program before it is ended. Contact your bank and ask about HAMP.
HARP (Home Affordable Refinance Program): Despite terrible hardship, many people made their payments throughout the recession with the notion that their debt was their responsibility. While making payments, many wanted to refinance at lower rates but were unable due to declines in their home value. Banks would not provide financing because in many cases the mortgage amount was higher than the value of the home. Many people resented that people not making payments were offered new, better terms while they were stuck with the higher rates. The HARP program was the answer for these people. It is designed for those who are current in their mortgages but otherwise cannot refinance due to any number of reasons. Under HARP the bank may not need to appraise the home and even when it does, the normal valuation limitation is irrelevant. In addition, normal income guidelines are waived and lower income levels can be approved. In short, this program has helped people who otherwise may have had to keep older higher rates to refinance at lower rates.
If you can benefit from HARP it is important to explore it now. To determine if you are eligible simply go to Harp.gov. When entering your information it is imperative to enter the exact same information that appears on your mortgage statement. If there is any discrepancy you may not receive an accurate answer. If you’re not certain, contact your lender or I can assist in determining if you are eligible.
Just don’t wait too long. While we may be very happy about coming attitudes regarding Israel and business from this new Congress, if you are someone who can benefit from one of these programs, don’t be surprised if they go away.
By David Siegel
David Siegel is a Home Lending Officer and can be reached at [email protected].
