HAMP, HARP, HAFA IN A NUTSHELL

The Home Affordable Modification Program (HAMP) is a program designed to boost the economy and to get the struggling housing market moving in the right direction again. HAMP may be used to modify first and second mortgages in order to keep a distressed homeowner in their home and to make their monthly mortgage payments more affordable.

The Home Affordable Refinance Program (HARP) was created for the same reasons as HAMP. HARP allows homeowners who are current on their mortgages to refinance their mortgages with today’s lower interest rates. Prior to this program, many homeowners were unable to take advantage of these lower interest rates due to the fact that their homes had substantially decreased in value and were “upside down” or “underwater.”

The Home Affordable Foreclosure Alternatives (HAFA) program was created for homeowners that do not qualify for mortgage modification under HAMP or those that fail to successfully complete the HAMP trial period. HAFA provides the homeowner with additional foreclosure avoidance options, including a Short Sale or a Deed-in-Lieu of foreclosure.

In these tough economic times, borrowers need to know the available options:

• Reinstatement: Reimbursement of installments that are past due, including additional fees and costs incurred by the lender because of the loan default.

• Payoff: Repayment of amount due on promissory note (principal plus interest and all fees and costs) which gives full discharge of the debt and satisfies the mortgage.

• Forbearance Agreement / Repayment Plan: Agreement between the lender and borrower wherein the lender agrees to stop the foreclosure and the borrower agrees to a payment plan that will bring the loan current over a specific period of time.

• Loan Modification: A permanent change to the existing delinquent mortgage and/or promissory note.  Lender may reduce the interest rate, term of loan, payment options, or other loan provisions to resolve the default.

• Deed in Lieu of Foreclosure: Release of the borrower from the note and mortgage obligations in exchange for a deed to the property.

• Short Sale: Lender’s acceptance of a purchase offer on the mortgaged property that is less than the full amount due on the loan.

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