During the recent economic downturn, people found it difficult to meet up with their mortgage or loan commitments due to many different reasons. In response, banks and other financial institutions took steps to sell the mortgaged property in view of obtaining the funds that are due from the owners of such property. This process is known as foreclosure on the mortgage and it has been recognized that there are many property owners who are threatened by foreclosure on their mortgages even at this time where the economy has seen a slight improvement. However, the U.S. government has introduced several remedial measures to mitigate this problem and help the mortgage and loan payers meet up with their commitments without having to undergo foreclosure.
According to the U.S. Department of Housing and Urban Development, the ‘Making Home Affordable Program’ is a critical part of the Obama governments’ initiative to prevent homeowners from foreclosures and therefore help the economy to recover from the ‘housing bubble’. In general, few strategies have been looked at when formulating these programs. These include, converting the high interest mortgage payments to payments based on the present interest rates, providing means of opting out for those who desire to give-up their home-ownership, facilities for unemployed homeowners as well as the facilities offered for homeowners who owe more than what their homes are worth. Based on these strategies, following programs have been initiated by the U.S. government.
Modify or refinance your loan for lower payments
Under the category of ‘modify or refinance your loan for lower payments’, the government has initiated programs such as ‘home affordable modification program’, ‘principle reduction alternative’, ‘second lien modification program’ and ‘home affordable refinance program’. These programs are designed to cater to the various difficulties faced by the homeowners battered by their mortgage payments.
For those who are having difficulties as a result of decrease in their home’s value, they can find a solution to their problem through the ‘home affordable refinance program’, ‘principle reduction alternative’ as well as from a program named as the ‘treasury/FHA second lien program’. Under these programs, which are categorized as ‘underwater mortgages’, homeowners will be able to obtain refinancing and shift into a more affordable payment plan although the lender of the mortgage or the loan should also agree to enter into such a program to settle the existing financial difficulties of its client.
Assistance for unemployed homeowners
The assistance for unemployment homeowners is carried out under three programs and these include the ‘home affordable unemployment program’, ‘emergency homeowners loan program’ and through ‘FHA forbearance for unemployed homeowners’. These programs can provide unemployed homeowners with temporary suspensions of the mortgage payments under various categories for which the homeowners would become eligible.
Managed exits for borrowers
In another category of programs, borrowers are given options for managed exists from existing mortgages through ‘home affordable foreclosure alternative’ and through the ‘redemption’ program. In relation to the redemption program, the borrowers will still have ownership of the housing for a period after the foreclosure within which the homeowner can reclaim the property by paying the outstanding mortgage balance and other due costs.
In addition, the Federal Housing Administration has also taken steps to minimize the damage caused by foreclosures by offering FHA-Insured mortgages.
Thus, the alternatives available for a homeowner to avoid foreclosure have now been expanded, and it is the duty of the borrowers or homeowners to decide for themselves whether the present mortgage plan could lead to a foreclosure. Moreover, timely reactions utilizing the services offered by the above mentioned programs help avoid such instances.