The government’s Making Home Affordable Program, which included the Home Affordable Modification Program (HAMP) and the Home Affordable Foreclosure Alternatives Program (HAFA), was developed in 2009 to help homeowners avoid foreclosure, stabilize the housing market, and improve the overall economy.
Unfortunately, the HAMP program has stopped accepting new applications and servicers stopped offering HAFA after December 30, 2016. Read on to learn the history of these programs and find out what options are still available for homeowners who are struggling to make their mortgage payments.
HAMP was a loan modification program that assisted borrowers by rewriting first lien mortgages so that the monthly payments were lower and more affordable.
The HAFA program provided two options so that borrowers could avoid foreclosure: short sales and deeds in lieu of foreclosure.
What’s a short sale? A short sale is when you sell your home for less than the total debt balance remaining on your mortgage and the proceeds of the sale pay off a portion of the mortgage balance.
With a HAFA short sale, the loan servicer approved the short sale terms prior to listing the home and then accepted the payoff in full satisfaction of the mortgage. This was different from regular short sales where the lender might be able to pursue a deficiency judgment following the short sale. (To learn more about deficiency judgments in the short sale context, see How to Avoid a Short Sale Deficiency Judgment.)
What’s a deed in lieu of foreclosure? A deed in lieu of foreclosure occurs when a lender agrees to accept a deed to the property instead of foreclosing in order to obtain title. With a HAFA deed in lieu of foreclosure, the homeowner voluntarily transferred ownership of the property to the lender in full satisfaction of the debt. This, too, was different from a regular deed in lieu of foreclosure where the lender might be able to pursue a deficiency judgment following the transaction.
While most of the programs under MHA, including HAMP and HAFA have ended, the federal government's Home Affordable Refinance (HARP) program—a mortgage refinance option—is available through 2018. With HARP, you might be able to get a lower interest rate on your mortgage loan, get a shorter loan term, and/or change your interest rate from an adjustable to fixed rate.
Even though HAMP and HAFA are done, you might qualify for another type of loss mitigation (foreclosure avoidance) program through your servicer or the owner of the loan. For example, to replace HAMP, Fannie Mae and Freddie Mac, the government-supported enterprises that own or back many mortgages, developed the Flex Modification program.
Also, in-house (“proprietary”) modifications, forbearance agreements, or repayment plans are typically available as well. If you decide that it’s time to give up the property, you might be able to arrange a short sale or deed in lieu of foreclosure.
To apply for a foreclosure avoidance option, you need to send an application along with supporting documentation—like pay stubs, tax returns, and bank statements—to your loan servicer. (Contact your servicer to get an application.)
After you send in your complete application, under federal law, the servicer generally can’t initiate or continue with a foreclosure. (Get an overview of foreclosure protections for homeowners with mortgages.)
The servicer then evaluates the application and lets you know if you qualify for a foreclosure avoidance option.
If you’re struggling to make your mortgage payments and facing a possible foreclosure, contact your mortgage servicer or a HUD-approved housing counselor as soon as possible. (Learn about the benefits to using a HUD-approved housing counselor.)
If you want to learn about how foreclosure works in your state and find out about possible foreclosure defenses in your case, consider talking to a local foreclosure attorney.