What is FHA Foreclosure Assistance?

The Federal Housing Authority (FHA) has historically provided foreclosure assistance for borrowers who are struggling to make their payments. Previously, the FHASecure program allowed mortgage borrowers to get low cost mortgage refinances to avoid foreclosure. More recently, the Obama administration rolled out the Making Home Affordable Program. This range of programs includes a number of different ways for consumers to receive FHA foreclosure assistance.

Home Affordable Refinance Program (HARP)

The Home Affordable Refinance Program (HARP) is designed for those who are current on their mortgages, but are having trouble financing because the value of their home has declined. A HARP loan will pay off your current mortgage and replace it with a more affordable home loan.

To be eligible for the HARP program, you must have a mortgage owned or guaranteed by Fannie Mae or Freddie Mac, be current on your loan payments, owe between 100% and 125% of the current market value of your home and have the ability to handle your new payments.

Home Affordable Modification Program (HAMP)

The Home Affordable Modification Program is for those who have been hit by financial hard times caused by extenuating circumstances other than unemployment. HAMP lowers your monthly mortgage payment to 31 percent of your monthly pre-tax income. This won’t change how much you owe, it will just prevent you from going into foreclosure.

Furthermore, if you have a second lien on your home (a home equity loan or home equity line of credit), you may be eligible for the Second Lien Modification Program (2MP), which is similar to HAMP except for second mortgages.

Home Affordable Foreclosure Alternatives (HAFA) Program

The Home Affordable Foreclosure Alternatives (HAFA) program is for those who can no longer afford their homes and want to move into a more affordable home. The HAFA program helps you complete a short sale, where you are able to sell the home for less than what you owe on it and still be released from your mortgage obligations. HAFA also provides $3,000 in relocation assistance. You must be able to document financial hardship to be eligible for this program.

Hardest Hit Housing Markets Fund

The Housing Finance Agency Innovation Fund of the Hardest Hit Housing Markets (HHF) is a collection of federal funds that were given to the states that suffered the most from the mortgage crisis. IF you live in Alabama, Arizona, Florida, California, Georgia, Illinois, Indiana, Kentucky, Mississippi, Michigan, Nevada, New Jersey, North Carolina, Ohio, Oregon, Rhode Island, Washington D.C., Tennessee or South Carolina, you may be able to receive assistance through your housing finance agency’s program office.

Each of these programs has its own requirements and stipulations. Most are administered through approved lenders, so it’s a good idea to talk to your current mortgage servicer about these programs. For more information, visit www.makinghomeaffordable.gov.