More Programs for Homeowners in Trouble

On May 14, the Treasury Department and the Department of Housing and Urban Development expanded the $50 billion Making Home Affordable (MHA) program, announcing foreclosure alternatives for homeowners who may not qualify for other assistance. These new initiatives are intended to streamline the process of selling homes worth less than the mortgage or facilitate transferring ownership to the lender. Neither option helps the homeowner's credit score, but it beats foreclosure. On May 14th, the Secretary of Treasury announced new details on the Making Home Affordable program: Foreclosure Alternatives provide incentives for servicers and borrowers to pursue short sales and deeds-in-lieu (DIL) of foreclosure in cases where the borrower is generally eligible for a MHA modification but does not qualify or is unable to complete the process, which helps prevent costly foreclosures and minimizes the damage that foreclosures impose on borrowers, financial institutions and communities. Home Price Decline Protection Incentives will provide lenders additional incentives for modifications where home price declines have been most severe and lenders fear these declines may persist. To encourage the modification of more mortgages and enable more families to keep their homes, the Administration, building on insights pioneered by Chairman Bair and the FDIC, has developed an innovative payment that provides compensation based on recent home price declines. These kinds of programs are great for everyone concerned but, like most programs from the government (or financial institutions, for that matter), they tend to be extremely difficult to understand. To help make this process easier to digest, the new Administration has constructed a new consumer website, www.MakingHomeAffordable.gov, to provide homeowners with detailed information about these programs along with self-assessment tools and calculators to empower borrowers with the resources they need to determine whether they might be eligible for a modification or a refinance. Through this website, borrowers can also connect with free counseling resources to help with outstanding questions; locate homeowner events in their communities; find a pretty neat checklist of key documents and materials to have ready when making that call to their servicer. There are also a FAQ section that is updated often.