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The Obama administration has announced a HAMP extension for 2 additional years, through 2015. It will be extending its hallmark Making Home Affordable (MHA) initiative until the end of 2015, hoping the extension will allow more homeowners to take advantage of loan modifications which can help them avoid foreclosure.
Immediately following the statement by the administration, the Federal Housing Finance Authority (FHFA) directed mortgage underwriters Fannie Mae and Freddie Mac to continue aiding homeowners through the government’s popular Home Affordable Modification Program (HAMP) throughout the extension period.
The extension is great news for homeowners who are struggling to ward off foreclosure and remain in their homes.
HAMP was unveiled in 2009 at the height of the economic crisis and was designed to offer relief for homeowners who had fallen behind in mortgage payments and were facing foreclosure. The program is funded through the U.S. Treasury’s bailout fund and has been modified since its inception to provide relief to a wider audience of homeowners. HAMP provides incentives for lenders and loan servicing companies who agree to rewrite loan terms to help borrowers avoid foreclosure.
According to data from the U.S. Treasury, homeowners participating in the program have realized median monthly savings of $546. The MHA also offers a similar refinance program for homeowners whose homes are not guaranteed by Fannie Mae or Freddie Mac. Although the administration predicted HAMP would provide aid to as many as 3 million to 4 million homeowners, so far only about 1.1 million homeowners have taken advantage of the program.
A streamlined version of HAMP helps homeowners who are more than 90 days behind in payments to modify loans quickly without the need to meet strict documentation requirements which many homeowners found too cumbersome and demanding.
In a statement regarding the extension, Treasury Secretary Jack Lew said the extension provides critical relief to homeowners still facing significant financial troubles.
“The housing market is gaining steam, but many homeowners are still struggling,” Lew said.
“Extending the program for two years will benefit many additional families while maintaining clear standards and accountability for an important part of the mortgage industry.”
Although certainly beneficial to homeowners facing financial troubles, home loan modification can be a complex process driven primarily by the lender. Homeowners seeking to ensure they receive the best modification terms can empower themselves by having an independent analysis performed on their loan and their financial situation.
The REST Report offered by Real Estate Services and Technology is one tool homeowners can use to make sure they understand all their options without relying solely on information provided by their lender. For most homeowners, loan modification is a one-shot deal: Knowing every option can help homeowners get the best terms for their unique financial situation.