1. Federal Home Loan Modification Programs
Chapter 11
Federal Home Loan Modification Programs

2. Should you seek a loan modification?
Loan modifications will save you money and may save your home, but sometimes may not be the best financial decision.
If your home is worth substantially less than the combined amount of your mortgages, do not seek a loan modification.
If you walk away from your mortgage, the home will be foreclosed upon, and in some states you may still be liable for the “deficiency”.

3. The Federal Government’s Making Home Affordable Program (“MHA”)
In response to the foreclosure crisis, the federal government created the Making Home Affordable Program.
MHA includes several different loan modification programs including:
HAMP- encourages loan modifications for first mortgages
HARP- helps borrowers refinance

4. Federal Government’s Home Affordable Modification Program
Home Affordable Modification Program (“HAMP”) made loan modification standards and provided incentive payments to servicers and lenders that meet these standards.
Basic eligibility -If you are not unemployed, but you’re still struggling to make your mortgage payments, you may be eligible. HAMP may lower your monthly mortgage payments in order to make them more affordable and sustainable for the long-term.

5. Basic Eligibility of HAMP Home Affordable Modification Program
The mortgage you are trying to modify must be the first lien and your primary residence;
The unpaid balance on your mortgage must be no more than $729,750 if it is a single-family residence;
You must have gotten the mortgage before Jan. 2009;
The total amount of your monthly mortgage payment must be no more than 31% of your gross monthly income;
You must be at risk of defaulting or already delinquent on your mortgage, or in foreclosure

6. Federal Government’s Home Affordable Modification Program
You must make each payment during the trial period by the last day of the month in which it is due.
Principle reduction incentive: if you get a permanent modification and make your required payments, the U.S. government may make payments directly to your servicer to reduce how much you owe.
What to do if you are denied: the servicer must send you a notice of denial with in two weeks of deciding you are not eligible.
What to do if your servicer is unresponsive: contact a HUD-approved housing counselor or an attorney to help you.
Payment forbearance under the unemployment program (“UP”)-If you lose job, the servicer cannot foreclose on your house for 12 months.
If a HAMP modification does not work for you, your lender must still consider you for other foreclosure alternatives

7. Refinancing your mortgage under the Home Affordable Refinance Program
If your mortgage is owned or securitized by Fannie Mae or Freddie Mac, you may qualify for the Home Affordable Refinance Program (HARP).
This program is designed to help homeowners who are unable to refinance due to declining property values- including those who owe more on their home than it is worth.
To be eligible, you can not have been more than 30 days late on your mortgage payment in the past 12 months.

8. The Hope For Homeowners (H4H) Program
The Hope for Homeowners (H4H) program was created in 2008 to allow eligible homeowners to refinance into FHA-insured 30 year fixed rate mortgages.
A FHA loan is a mortgage loan that is insured by the Federal Housing Administration (FHA).
The details of the refinancing programs change frequently. To see what refinance options are available, visit rates/pages/default.aspx

9. Workouts for FHA/HUD-Insured Mortgages
How to tell if you have an FHA/HUD mortgage
Help getting a workout with your FHA/HUD mortgage
Repayment and forbearance plans
Streamline refinance
Refinancing for Non-FHA borrowers
Mortgage modification
Partial claims
Short sales and deeds in lieu of foreclosure

10. Workouts on VA Mortgages
Repayment Plan -
Special Forbearance -
Modification -
Assumption -
Compromise Claim -
Refinance -
VA-HAMP -
Refunding -
Deed in Lieu -

11. Workouts On Rural Housing Service Mortgages
RHS Assistance Programs -
Payment Moratorium -
Delinquency Workout Agreement -
Protective Advance -
Payment Assistance –
Loan Modification –
Pre-Foreclosure Sale -
Deed in Lieu –
You Must Apply Quickly When These Options are Offered -
Appeals -

12. Debt Collection By the Government After Foreclosure of an FHA, VA, Or RHS Guaranteed Loan
Some workout options, including pre-foreclosure sales (short sales) and deeds in lieu of foreclosure, potentially involve some form of forgiveness of the obligation to pay a debt. This forgiveness may be reported to the IRS as income given to you at the time the option was exercised.
There are many ways to avoid the harsh effects of these tax claims, but it is important to understand the risks and take appropriate action to address them.