The Obama Administration’s Making Home Affordable Program includes opportunities to modify or refinance your mortgage to make your 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.

Home Affordable Modification

Many homeowners are struggling to make their monthly mortgage payments perhaps because their interest rate has increased or they have less income. A Home Affordable Modification will provide them with mortgage payments they can afford.

If you can no longer afford to make your monthly loan payments, you may qualify for a loan modification to make your monthly mortgage payment more affordable. Millions of borrowers who are current, but having difficulty making their payments and borrowers who have already missed one or more payments may be eligible.

Second Lien Modification Program (2MP)

Many homeowners may be struggling to make their monthly mortgage payments because they have a second lien.  The 2nd Lien Modification Program (2MP) offers homeowners a way to lower payments on their second mortgage when their first mortgage is modified under the Home Affordable Modification Program.

Under 2MP, with their investor’s guidance, a mortgage servicer may:

• Reduce the interest rate to one percent for second liens that pay both principal and interest (amortizing);
• Reduce the interest rate to two percent for interest-only second liens;
• Extend the term of the second lien to 40 years;
• If the principal was deferred (through forbearance) on the first lien, a servicer must forbear the same proportion on the second lien;
• If the principal was forgiven on the first lien, in accordance with the Principal Reduction Alternative program, a servicer must forgive the same proportion on the second lien; although a servicer may, in its discretion, forgive a larger portion or all of the second lien and will receive incentives for doing so.

Home Affordable Foreclosure Alternatives (H.A.F.A)

Many homeowners may feel that they can no longer afford their home, but want to avoid the negative effects of foreclosure. The Home Affordable Foreclosure Alternatives Program offers homeowners $3,000 to help transition to more affordable housing when they complete a short sale or deed-in-lieu of foreclosure.

These options are available for homeowners who:

1. do not qualify for a trial mortgage modification under the Making Home Affordable Program

2. do not successfully complete the trial period for their modification

3. miss at least two consecutive payments during their modification period

4. request a short sale or deed-in-lieu of foreclosure.

Local Solutions to Avoid Foreclosure

In an effort to combat foreclosures, stabilize communities, and improve the economic condition of families across the country, the Obama Administration has put in place a number of programs and initiatives that provide solutions at the state level.

The Housing Finance Agency Innovation Fund for the Hardest Hit Housing Markets (“Hardest Hit Fund”) was designed to support innovative programs created by Housing Finance Agencies (HFAs) to stabilize housing markets and help families avoid foreclosure. HHF provides targeted aid to families in the states most impacted by the housing downturn.