In response to the difficulties people throughout the nation have encountered in making house payments, the federal government has sought to make it easier for those in that situation to avoid foreclosure. One way in which this was done was through the Home Affordable Modification Program. The program, which has been in existence for three years, looks to reduce the amount owed on the principal portion of the mortgage.
Earlier this month it was announced that the program will be extended through the end of 2013. In addition, the amount of money available as an incentive to private lenders who reduce the principle amount of the mortgage due will be tripled. Mortgages controlled by Freddie Mac and Fannie Mae will now also be eligible to receive the incentives for reducing the principal on certain mortgages.
The program is geared toward homeowners carrying a large load of debt who are facing foreclosure. For people who are allowed to take part in the program, the interest rate on their loan may be lowered to 2 percent over the course of five years. Participants save an average of $500 per month.
Since its inception, the program’s results have been mixed. Less than half of the people who have applied for the program have received permanent assistance through it. There have also been reports that it is difficult to navigate through. In addition to complaints of phone calls to banks not being returned, apparently some applications were disqualified when the bank lost documents.
In addition to the renewal of the Home Affordable Modification Program, legislation regarding another program, the Home Affordable Refinance Program will apparently be revealed soon. Hopefully each of these programs will make it possible for more homeowners to remain in their homes.
Source: Associated Press, “Obama administration to extend and expand foreclosure relief program,” Jan. 27, 2012