Federal Programs for California Homeowners Facing Foreclosure
As the real estate world braces for a second wave of foreclosures, questions persist as to the public's awareness of federal and state programs that can help homeowners. If a small study conducted by the Nevada Association of Realtors (NVAR) is any indication, government and consumer agencies' attempts to increase public knowledge of Federal and State programs have fallen far short. The survey, based on 500 interviews conducted by phone as well as focus groups, with homeowners having some foreclosure experience, found that more than 50% were not aware of federal and state programs designed to aid homeowners in crisis. Furthermore, close to that number reported that their lenders were unwilling to consider their cases.
The findings in the NVAR study are particularly troubling because in 2010, Nevada had the highest foreclosure rates in the nation, a rate that per household that was double the rate of foreclosure as compared to other states. This raises questions about how well-informed homeowners are in other areas of the country, and how effective outreach efforts have been, especially with regard to resources that are accessible to consumers in any state?
At the federal level, there are three major programs available to homeowners through the "Making Home Affordable" initiative. The Home Affordable Refinancing Program (HARP) is an option for those who continue to make their payments on time but whose mortgages are "under water" (as long as the loan is held by Fannie Mae or Freddie Mac). Homeowners who are employed but having difficulty making their payments may be able to lower their monthly payments to 31% of their income through the Home Affordable Modification Program (HAMP), which also has a Second Lien Modification Program (2MP) component. For those wishing to simply exit gracefully, the Home Affordable Foreclosure Alternatives (HAFA) program offers special short sales and deed-in-lieu of foreclosures, which relieve the owners of any residual financial responsibility and provide monetary assistance for alternative housing.
In addition, variations of these programs are available for home loans insured or guaranteed through specific granting agencies such as the Federal Housing Administration or Veterans Administration. For homeowners who are not eligible for federal programs, there are proprietary programs run by lenders. HUD-approved counselors, as well as those affiliated with reputable local housing agencies can help those facing foreclosure determine what federal and state initiatives and/or local programs are available to assist them.
The Face of Foreclosure. Nevada Association of Realtors, n.d. 27 Apr. 2011.
Home Affordable Refinancing Program (HARP). Making Home Affordable, n.d. 27 Apr. 2011.
Home Affordable Modification Program (HAMP). Making Home Affordable, n.d. 27 Apr. 2011.
Second Lien Modification Program (2MP). Making Home Affordable, n.d. 27 Apr. 2011.
Home Affordable Foreclosure Alternatives (HAFA). Making Home Affordable, n.d. 27 April 2011.