Financial Institutions That Help Stop Foreclosures
- As of February 2010, the U.S. Department of Treasury has provided funding to states that had a 20 percent or more decline in home prices. The Hardest Hit Fund allows homeowners to get help reducing the principal balances on their loans. Homeowners who have lost a job can get help making the mortgage payments.Transition assistance is provided to all needing to obtain new housing. Homeowners must be low-to-moderate income to qualify.
- Another program provides up to $50,000 to each homeowner experiencing a 15 percent decrease in income. Loan funds can go toward any arrearages and monthly mortgage payments. This is called the Emergency Homeowners' Loan Program (EHLP), administered through local state housing finance agencies that received funding from HUD. The first lien mortgage will be reduced to 31 percent of the homeowner's income. Mortgage payments can be paid for up to 24 months or until the $50,000 is expended, whichever comes first.
- The Federal Housing Administration (FHA) helps homeowners obtain approval from their banks to sell their homes with negative equity. The bank is taking a loss on the home sale since the balance owed on the loan is higher than the sale price. FHA provides a $1,000 incentive to the homeowner if he sells the home within three months of submitting an application for help. The incentive is to be used toward moving expenses. FHA also is allowing homeowners with unstable loans to refinance into a low fixed interest rate FHA loan. The homeowner must be current on mortgage payments to obtain an FHA Short Refinance.
- Freddie Mac and Fannie Mae-insured loans are allowing homeowners to get a loan modification, refinance or forbearance through the Making Home Affordable programs. To qualify for help, the homeowner must demonstrate a financial hardship. The homeowner's new mortgage payment will be 31 percent of his total household income. The Making Home Affordable website has a loan look up tool that can help you determine if you have a Freddie Mac or Fannie Mae-insured loan. The homeowner can obtain an application for help through his mortgage servicer.
