Program’s popularity makes for difficult, slow process

By Christa Buchanan
C & G Staff Writer

The federal Making Home Affordable (MHA) programs might be just what the struggling housing market, and homeowners, needed to rebound since the Great Recession sent unemployment rates shooting up and home prices spiraling downward.

It’s a combination that left many people either teetering on the verge of or nose-diving toward foreclosure, or owing more than their home is currently worth.

“The programs will help both the housing market and homeowners substantially. By keeping more people in their homes, you’re helping them and the market. The housing market is already saturated with foreclosures; the fewer homes coming on the market, the quicker the market can absorb excess inventory and allow housing prices to stabilize and start to increase,” said Mason Miller, vice president of First National Mortgage Bankers in Auburn Hills.

That said, MHA is not necessarily a cure-all, as the process can be difficult and slow for those trying to access it.

Implemented as part of the American Recovery and Reinvestment Act, according to the U.S. Department of Treasury’s Financial Stability Plan Oversight Board, www.financialstability.gov, the $75 billion Making Home Affordable program is intended to help “as many as 7 (million) to 9 million homeowners making a good-faith effort to make their mortgage payments, while attempting to prevent the destructive impact of the housing crisis on families and communities.”

“First and foremost, it’s important to note that the Making Home Affordable program has two facets; first being the Home Affordable Refinance Program (HARP), which allows Fannie Mae and Freddie Mac clients to refinance their home even when they owe more than what their home is worth, up to 125 percent of current market value. Second is the Home Affordable Modification Program (HAMP), which helps clients who do not qualify under the Home Affordable Refinance Program,” said Miller.

Through HARP, which expires June 30, 2011, homeowners who are current on their mortgage — meaning payments haven’t been more than 30 days late in the last 12 months — can reduce their interest rate and extend the terms of their mortgage; however, Miller said, it’s all dependent on what the current rate and terms are.  

Meanwhile, HAMP, which ends Dec. 31, 2012, allows homeowners who have experienced financial hardship — job loss, medical expenses, divorce, etc. — and are struggling with or behind on their mortgage payments to modify their mortgage via such measures as lowering the interest rate to as low as 2 percent and extending the length of the mortgage up to 40 years so that the mortgage payment doesn’t exceed 31 percent of the homeowner’s gross income. Among other requirements, homeowners must make all their mortgage payments on time over a three-month trial period to be eligible for HAMP.

‘The numbers are staggering’
“The Home Affordable Modification Program’s goal is to keep a client in their home when they don’t qualify under the refinance program. This can include reducing their interest rate below current market rates, extending the terms of the loan and possibly suspending payments on a portion of the principal owed. This is determined by the client’s current lender (or) servicer,” said Miller, adding that demand for both HARP and HAMP has been very high.

“The numbers are staggering. Over 1.1 million people have applied for HAMP, and the number of people who’ve been approved is still only at about 14 percent,” said Tony Haddad of SBH Communications in Rochester, citing statistics he’s come across while researching MHA in an effort to get the word out on difficulties homeowners face in attempting mortgage modification through the program.

Those totals only represent the number of people who had applied for and been approved for modification as of the end of December 2009 — a month that, according to the MHA January 2010 servicer performance report released Feb. 17, started a trend toward “record progress” that continued through January: So far, 116,000 homeowners have been approved for permanent modification, an additional 76,000 permanent modifications have been offered, more than 1 million homeowners have started trial modifications, and nearly 1.3 million trial modification offers have been  extended.

The problem is, said attorney Kevin Green of Bashore Green Law Group, being offered a trial modification doesn’t necessarily mean a permanent modification will be extended, even if the homeowner successfully completes the three-month trial period.

Tracey’s story
Green and his partner, Lionel Bashore, are representing Oakland County resident Tracey Briggs, who has been stuck in a seemingly never-ending loop of disappointment in her quest to save her family’s home of 16 years.

Briggs thought she had everything in order after sending her bank her application for HAMP and all the appropriate paperwork multiple times: She finally got approved for a three-month trial mortgage modification, and after making all the payments on time, she was sure she’d be approved for permanent modification and save her family’s home.

Unfortunately, that wasn’t the case: The Briggs family is now facing foreclosure.

“When I made the final payment for the three-month trial period, I received a letter stating that foreclosure action will be taken,” said Briggs, who said when she contacted her loan servicer, she was told once again that they were missing some paperwork.

“What’s important is when they put her through the quote, unquote ‘trial period,’ she made all the payments on time. When she was approved, she had already provided all the necessary information; they had received that information — yet they gave no explanation why she was being denied,” said Green.

Initially, a homeowner could be denied for modification if their income is unstable, said Miller: “For example, if your only source of income were unemployment. If you fail to successfully complete the three-month trial period according to the terms provided, you could also be denied.”

A large debt-to-income ratio — if recurring monthly expenses are “equal to or more than 55 percent of monthly income — is another possible reason for denial, according to MHA; however, if the homeowner participates in housing counseling, they could still be approved for HAMP.

For more information on MHA, visit www.makinghomeaffordable.gov. For a free consultation and more help, contact a housing counselor via the Federal Housing Administration’s Department of Housing and Urban Development HOPE for Homeowners program at www.hud.gov/hopeforhomeowners or at (888) 995-HOPE (4673).

You can reach Staff Writer Christa Buchanan at cbuchanan@candgnews.com or at (586) 498-1061