THE government created the Making Home Affordable Program to help struggling homeowners stay in their homes. Although close to $80 billion has been allocated by the government to address the current mortgage crisis, part of which was intended as incentives to lenders/investors and servicers for successful loan modifications, it seems like only a fraction of this money has been used to assist homeowners because of the tough eligibility requirements. It has been especially tough for homeowners who have found themselves out of a job due to the recession. Unemployment is currently one of the most difficult financial hardships that people are facing. At this time, the unemployment numbers are at an all-time high, hovering around 10 percent.
The government recently announced the new Unemployment Program (UP) which supposedly took effect on August 1, 2010. The program requires lenders to reduce or suspend payments for at least 90 days for qualified homeowners. The basic requirements are: (1) The mortgage loan is a first mortgage on borrower’s primary residence obtained on or before January 1, 2009, (2) mortgage amount should be $729, 750 or less for a single-family property and (3) the loan has not been previously modified under the Home Affordable Modification Program (HAMP).
The regular HAMP loan modification guidelines will still apply but if unemployed, the lender may offer either a temporary suspension of payments or an extremely low payment for a specified period of time (3-6 months) until the homeowner finds employment. The borrower must request assistance in the first 90 days of delinquency and must submit evidence that they are receiving unemployment benefits. If re-employed during the forbearance period, the borrower will be considered for the regular HAMP program provided that they meet the requirements at that time.
Unemployed homeowners affected by the recession can benefit from this program as they continue their job search while living on unemployment benefits. This could be problematic, however, for those who foresee long term unemployment because of the fact that unemployment benefits will terminate at some point. I think it remains to be seen whether this program will in fact help a lot of people save their home or if it is simply delaying an inevitable foreclosure. For sure, it may help people who are experiencing a temporary loss of income.
If the borrower remains unemployed by the time the temporary loan modification ends, it appears that a permanent loan modification is not feasible under the program. Thus, at that point, the borrower may have no other choice but to simply surrender the property, deed the property back to the lender or do a short sale.
If you’re currently unemployed or facing a loss of income, call your lender and ask them about the Making Home Affordable Unemployment Program (HAUP) to see if you are eligible or go to the government website at www.makinghomeaffordable.gov for more information.
In a lot of cases, filing Chapter 13 bankruptcy can also help you save your home from foreclosure. Usually, unemployment benefits can be included as part of household income when proposing a court repayment plan. If you have a 2nd mortgage that is not supported with equity because your house is "upside down", filing a Chapter 13 may also help you remove this 2nd mortgage and reduce what you owe. This is definitely something you should look into by consulting a knowledgeable and experienced bankruptcy attorney who can explain to you the benefits of Chapter 13. Even if you are already doing a loan modification, I suggest that you still find out about your bankruptcy options in case your loan modification is denied.
Call toll-free 1-866-477-7772 to schedule a free consultation with our law firm. We have offices in Glendale, Cerritos, West Covina and Valencia.
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None of the information herein is intended to give legal advice for any specific situation. Atty. Ray Bulaon has successfully helped over 4,000 clients in getting out of debt. For a free attorney evaluation of your situation, please call Ray Bulaon Law Offices at TOLL FREE 1-866-477-7772.
( Published October 30, 2010 in Asian Journal Los Angeles p. C2 )
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