house is more than just wood, nails, shingles and siding. It’s your home. You’ve spent years furnishing and decorating it. It might be where your children live or where they grew up. It’s the place you come back to after a hard day’s work. It’s your refuge from the world. But you’ve been unable to make your mortgage payments for many months. Your mortgage company has been calling you weekly – to the point where you’re at your wit’s end. This might be because you lost your job or had some other financial disaster. But that doesn’t matter. The point is you’re about to lose your home.
You may be able to avoid this because our government wants to help people like you that are in danger of losing their homes. The program is called Making Homeownership Affordable. All it takes to get started is to call 888-995-HOPE (4673). Do this and you’ll be connected with a housing specialist from a HUD-approved housing counseling agency that will talk with you about your specific situation. He or she will be able to offer you a variety of services such as identifying those mortgage assistance programs that might be suitable given your situation. Your counselor will also explain the documents you’ll need and in certain circumstances may even submit those documents to your mortgage holder for you. You will be given help in creating a budget that would allow you to cover your mortgage payments and other expenses. And you will be provided with information regarding local resources that could be of help.
The documentation you will need
If you want to get help through the Making Homeownership Affordable program, you’ll need to have the following documents available:
• Your monthly mortgage statement
• The last two years of your tax returns
• If applicable, information about a second mortgage or any other encumbrances on your home
• If you are self employed your most recent quarterly or year-to-date P& L statement
• The two most recent pay stubs for all members of your household that contribute toward your mortgage payment
• Documentation of any income that you receive from other sources such as Social Security, child support, alimony, etc.
• Your two most recent bank statements
• A utility bill showing your name and property address
• An unemployment insurance letter (if applicable)
• The minimum monthly payments and account balances for all of your credit cards
• Information regarding any other assets and your savings
• A letter describing what happened that caused your income to be reduced or that you lost your job or that your expenses were increased due to illness, divorce etc. (optional)
What you’re housing expert will do
If you choose to work with a HUD-approved housing counselor you can expect that person to work as your advocate and advisor. He or she will need as much information about your situation as possible to help decide which MHA option would be best for you. When working as your advocate your counselor will need the documentation described above to champion your cause. This will not only be documented information about your current mortgage loan but also your overall financial situation and your prospective income in the future. The more of this documentation you can provide, the easier it will be for your counselor to find the best solution given your situation.
Programs that could help you reduce your monthly payments
There are a number of government-sponsored programs available to help people like you. Some of these are designed to help you reduce your monthly payments. This includes HAMP (Home Affordable Modification Program) and the Principle Reduction Alternative (PRA). HAMP could be helpful if you’re not unemployed but are struggling to meet your mortgage payments. If you’re underwater, that is your home is currently worth a lot less than what you owe on it, you could be eligible for PRA. There is also the Second Lien Modification Program This is designed to help people whose first mortgage had been permanently modified under HAMP but have a second mortgage on the same property. If your mortgage loan is insured or guaranteed by the Federal Housing Administration, it’s possible you could be eligible for the FHA Home Affordable Modification program (FHA-HAMP).
Programs designed to reduce your interest rate
Many people have a problem making their monthly payments because they’re trapped into a mortgage with a very high interest rate. If you fall into this category, there are two programs that could lower that interest rate. The first of these is the Home Affordable Refinance Program (HARP), which is designed for people who are not behind on their mortgage payments but have been unable to refinance their mortgages through traditional means. The second is the FHA Refinance for Borrowers with Negative Equity (FHA Short Refinance). It is for those who are not behind on their mortgage payments but are underwater and their mortgage loans are not guaranteed or insured by the FHA.
If you’re unemployed
If you’ve been unable to make your mortgage payments because you’re unemployed there is the Home Affordable Unemployment Program (UP). This would depend on your situation but it’s possible that your mortgage payments could be reduced to 31% of your income or even suspended altogether for a year or more.
Finally, there is the Hardest Hit Fund (HHF) that has more than $7.6 billion to help borrowers in states that were hardest hit by the recent economic crisis.
It will take time and effort
If you believe that Making Homeownership Affordable could help you, do understand the program will take some time and effort. The more prepared you are, the more positive an outcome you can expect. A good start is to spend some time on the MakingHomeAffordable.gov website to learn about your options, your eligibility and what you’ll need to do to apply for assistance. Review the various programs available and the features they offer so that you can choose the one you think will best fit your situation.
Your mortgage company wants you to stay in your house
Believe it or not, your mortgage loan servicer wants to keep you in your house. One of the efforts you will need to make is showing it that you are committed to helping with your modification. Of course, if your loan servicer agrees to modify your loan, it will get lower returns on its investment but this will be far less than what a foreclosure would cost. This means your mortgage company’s biggest concern is whether or not you would be able to comfortably make the payments under your new modified terms. You will need to submit an Initial Package of documents and the more information you can offer assuring your loan servicer that you will be able to make the new, modified payments the easier it will be for it evaluate your modification application.
As you have read, our government does want to help you stay in your home and it is possible – regardless of how severe your situation might be. The important thing is to get started. Make that phone call to 888-995-HOPE (4673) today and talk with an HUD-approved housing counselor.