For Austin residents facing foreclosure, the U.S. Department of Housing and Urban Development (HUD) offers several federal foreclosure prevention programs, including:
The Home Affordable Modification Program (HAMP) lowers a household’s monthly mortgage payment to 31 percent of a household’s verified monthly gross (pre-tax) income to make payments more affordable. The typical HAMP modification results in a 40 percent drop in a monthly mortgage payment. Eighteen percent of HAMP homeowners reduce their payments by $1,000 or more.
The Principal Reduction Alternative (PRA) helps homeowners whose homes are worth significantly less than they owe by encouraging servicers and investors to reduce the amount they owe on their home.
The Second Lien Modification Program (2MP) allows homeowners with a first mortgage under the Home Affordable Modification Program (HAMP) to have a second mortgage on the same property, or a modification or principal reduction on their second mortgage under 2MP. It assists homeowners who have a home equity loan or Home Equity Line of Credit (HELOC), or some other second lien that is making it difficult for the homeowner to pay mortgage payments.
The Home Affordable Refinance Program (HARP) enables homeowners who are current on their mortgages and have been unable to obtain a traditional refinance because the value of the home has declined, to be eligible to refinance through HARP. HARP is designed to help homeowners refinance into a new affordable, more stable mortgage.
There are also federal assistance programs for unemployed homeowners, including:
The Home Affordable Unemployment Program (UP) provides homeowners having difficulty making mortgage payments due to unemployment to obtain a temporary reduction or suspension of mortgage payments for at least twelve months while the homeowner seeks re-employment.
The Emergency Homeowners’ Loan Program (EHLP) provides mortgage payment relief to eligible homeowners experiencing a drop in income of at least 15 percent directly resulting from involuntary unemployment or under employment due to adverse economic conditions and/or a medical emergency.
The FHA Special Forbearance Program assists homeowners who are having difficulty making mortgage payments because they are unemployed and have no other sources of income. FHA now requires servicers to extend the forbearance period by offering a reduced or suspended mortgage payment for up to twelve months for FHA borrowers who qualify for the program.