The Obama Administration’s Making Home Affordable Program includes opportunities to modify or refinance a mortgage to make its monthly payments more affordable. It also includes the Home Affordable Foreclosure Alternatives Program for homeowners who are interested in a short sale or deed-in-lieu of foreclosure.
About the Program
In February 2009, the Obama Administration introduced a comprehensive Financial Stability Plan to address the key problems at the heart of the current crisis to get the economy back on track. A critical piece of the effort is Making Home Affordable, a plan to stabilize the housing market and help struggling homeowners get relief and avoid foreclosure.
Over one million homeowners have already gotten help under the program. The program is on track to help 3 to 4 million homeowners by 2012.
Homeowners seeking reduction on their mortgage payment in order to remain in their homes can go to the government website and answer a few questions (such as whether their first mortgage payment is more than 31% of their income) to determine if they are eligible for the program, which could potentially make their payments more affordable.
But is the program working?
Moody's Investors Service Analysis
Moody's Investor Service is showing just a 50/50 success rate with the Home Affordable Modification Program. servicers participating in HAMP had converted almost 300,000 permanent modifications. However, they had also canceled 277,640 trial modifications. Moody’s says this represents approximately a 50 percent success rate. The report also shows 3,744 permanent modifications have been canceled.
According to Moody’s, the biggest culprits keeping conversions low are insufficient paperwork and negative equity.
“We believe the low conversion rate is a combination of two issues: borrowers failed to provide the documents they promised, and the rate reduction and principal forbearance used under HAMP were not enough to motivate severely underwater borrowers to start paying again,” Moody’s analysts wrote in their report.
Help for Homeowners
The U.S. government homeowner website, MakingHomeAffordable.gov, provides detailed information and resources about the affordable mortgage programs available for struggling homeowners. Through this website, homeowners can also connect with free HUD-approved counseling organizations, locate free events in their area, find the application documents necessary to apply for the Making Home Affordable Program, as well as find answers to frequently asked questions, and much more.
The website informative is extremely useful to homeowners who are seeking to do their part to help solve our nation’s housing crisis and put our country on the path to a lasting economic recovery.
Mary McCarthy - Mary T. McCarthy is the blogger at pajamasandcoffee.com and Editor of Chesapeake Family magazine.
