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Making Home Affordable – Program Updates

On May 14, 2009, the Treasury and the Department of Housing and Urban Development announced updates to the Making Home Affordable Program.  These updates detail Foreclosure Alternatives Incentives and Home Price Decline Protection Incentives.

Foreclosure Alternative Program.  The Foreclosure Alternative Program provides incentives to mortgage servicers to pursue short sales of homes or deeds in lieu of foreclosure.  In either case, the incentives are aimed at helping homeowners who can no longer afford to stay in their homes by allowing them to avoid foreclosure and relocate to a home that they can afford.

The updates indicate that homeowners who satisfied the minimum eligibility requirements for a modification under the Program but who could not qualify for a modification will be eligible for the Foreclosure Alternative Program.  For example, a homeowner may meet all eligibility requirements yet the servicer determined that the borrower would not be able make payments on a loan as modified under the Program; in this case, the homeowner may be eligible for the foreclosure alternative.  Further, homeowners who received a modification but who were unable to sustain payments under that modification will be eligible for the Foreclosure Alternative Program.

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Making Home Affordable Programs – Updates for Mortgage Holders and Servicers

On April 28, 2009, Treasury announced updates to the Making Home Affordable Program.  As previously discussed, the Treasury’s Making Home Affordable Program, which is aimed at helping 7 to 9 million homeowners, consists of two programs: The Home Affordable Refinance Program and the Home Affordable Modification Program.  The newly announced updates address modifications to second mortgages where the first mortgage has been modified under the Home Affordable Modification Program.

The Making Home Affordable Program is a completely voluntary program.  However, mortgage holders and servicers that do sign up for the Program, should realize that they must modify any second mortgage for a homeowner whose first mortgage has been modified under the Program.   A mortgage holder cannot elect not to modify a second mortgage once it has entered the Program.  A list of participating institutions is available here.

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Making Home Affordable Programs – Updates for Homeowners

On April 28, 2009, Treasury announced updates to the Making Home Affordable Program.  As previously discussed, the Treasury’s Making Home Affordable program, which is aimed at helping 7 to 9 million homeowners, consists of two programs: The Home Affordable Refinance Program and the Home Affordable Modification Program.  The newly announced updates address modifications to second mortgages where the first mortgage has been modified under the Home Affordable Modification Program.

The important thing for homeowners to recognize is that the modification to the second mortgage is automatic.  That is, if the holder of the second mortgage is a participating servicer under the Making Home Affordable Program, then the holder must modify the second mortgage whenever a first mortgage is modified under the Program.  The updates address both traditional, amortizing second mortgages and interest-only second mortgages.

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