Q&A for borrowers about the Homeowner Affordability and Stability Plan (HASP)
...for borrowers who are at risk of foreclosure. For Q&A for borrowers who are current on their mortgage go here.
1. What help is available for borrowers who are at risk of foreclosure either because they are behind on their mortgage or are struggling to make the payments?
The HASP offers help to borrowers who are already behind on their mortgage payments or who are struggling to keep their loans current. By providing mortgage lenders with financial incentives to modify existing first mortgages, the Treasury hopes to help as many as 3 to 4 million homeowners avoid foreclosure regardless of who owns or services the mortgage.
2. Do I need to be behind on my mortgage payments to be eligible for a modification?
No. Borrowers who are struggling to stay current on their mortgage payments may be eligible if their income is not sufficient to continue to make their mortgage payments and they are at risk of imminent default. This may be due to several factors, such as a loss of income, a significant increase in expenses, or an interest rate that will reset to an unaffordable level.
3. How do I know if I qualify for a payment reduction under the HASP?
In general, you may qualify for a mortgage modification if (a) you occupy your house as your primary residence; (b) your monthly mortgage payment is greater than 31% of your monthly gross income; and (c) your loan is not large enough to exceed current Fannie Mae and Freddie Mac loan limits. Final eligibility will be determined by your mortgage lender based on your financial situation and detailed guidelines that will be available on March 4, 2009. To make sure you will be succesful and get the best possible loan modification you may want to hire a loan modification service. The cost is less than a refinance, and well worth it.
4. I do not live in the house that secures the mortgage I'd like to modify. Is this mortgage eligible for the HASP?
No. For example, if you own a house that you use as a vacation home or that you rent out to tenants, the mortgage on that house is not eligible. If you used to live in the home but you moved out, the mortgage is not eligible. Only the mortgage on your primary residence is eligible. The mortgage lender will check to see if the dwelling is your primary residence.
5. I have a mortgage on a duplex. I live in one unit and rent the other. Will I still be eligible?
Yes. Mortgages on 2, 3 and 4 unit properties are eligible as long as you live in one unit as your primary residence.
6. I have two mortgages. Will the HASP reduce the payments on both?
Only the first mortgage is eligible for a modification.
7. I owe more than my house is worth. Will the HASP reduce what I owe?
The primary objective of the HASP is to help borrowers avoid foreclosure by modifying troubled loans to achieve a payment the borrower can afford. Lenders are likely to lower payments mainly by reducing loan interest rates. However, the program offers incentives for principal reductions and at your lender's discretion modifications may include upfront reductions of loan principal.
8. I heard the government was providing a financial incentive to borrowers. Is that true?
Yes. To encourage borrowers who work hard to retain homeownership, the HASP provides incentive payments as a borrower makes timely payments on the modified loan. The incentive will accrue on a monthly basis and will be applied directly to reduce your mortgage debt. Borrowers who pay on time for five years can have up to $5,000 applied to reduce their debt by the end of that period.
9. How much will a modification cost me?
There is no cost to borrowers for a modification under the HASP. If you wish to get assistance from a HUD-approved housing counseling agency or are referred to a counselor as a condition of the modification, you will not be charged a fee.
10. Is my lender required to modify my loan?
No. Mortgage lenders participate in the program on a voluntary basis and loans are evaluated for modification on a case-by-case basis. But the government is offering substantial incentives and it is expected that most major lenders will participate.
11. I'm already working with my lender/loan modification service on a loan workout. Can I still be considered for the HASP?
Ask your lender or modification service to be considered under the HASP.
12. How do I apply for a modification under the HASP?
You may not need to do anything at this time. Most mortgage lenders will evaluate loans in their portfolio to identify borrowers who may meet the eligibility criteria. After March 4 they will send letters to potentially eligible homeowners, a process that may take several weeks. If you think you qualify for a modification and do not receive a letter within several weeks, contact your mortgage servicer or a HUD-approved housing counselor. Please be aware that servicers and counseling agencies are expected to receive an extraordinary number of calls about this program.
13. My loan is scheduled for foreclosure soon. What should I do?
Contact your mortgage servicer or loan modification service. Many mortgage lenders have expressed their intention to postpone foreclosure sales on all mortgages that may qualify for the modification in order to allow sufficient time to evaluate the borrower's eligibility.
14. What circumstances will either disqualify me, or make it difficult to get a loan modification?
- Qualifying income too high may limit your benefit, or result in a decline
- Qualifying income too low may limit your benefit, or result in a decline
- Significant net worth and/or ownership of other property may result in a decline
- Second mortgages do not qualify
- Properties other than primary residence do not qualify
- Jumbo loans do not qualify
- Private label loans: non-FHA and non-GSE (Fannie, Freddie, VA, others) loans do not qualify
To prevent foreclosure and get the best possible loan modification, consider hiring LX Financial.
Please call me at 800-405-0676 or email me for further assistance.