Are you struggling to pay your mortgage or sell your home to avoid foreclosure? Help may be right around the corner.  Last month the government announced that it is making adjustments to the Home Affordable Modification Program (HAMP) and to the Federal Housing Administration (FHA) programs.

While the programs listed below have been updated to allow additional people to qualify, the biggest benefit to consumers are the incentives HAMP is offering to lenders and loan servicers who agree to provide a homeowner with one of the services listed below. The incentives encourage loan servicers to agree to loan modifications, refinance loans and agree to short sale offers that they previously may have denied.

Here are just a few of the highlights of programs for homeowners coming down the road. Some will be available in the next two weeks; others will be rolled out over the coming months.

1.     For borrowers who have not been able to refinance a loan due to the decreased value of their home, the HAMP may help you get into a more affordable mortgage. Borrowers’ loans must be backed by Fannie Mae or Freddie Mac. To see if your loan qualifies click here and select the link for Fannie Mae or Freddie Mac.

This is also an option for people who have a second lien on their property. Refinancing may allow you to consolidate the two loans and have one, affordable monthly payment.

2.     If you have experienced a loss of income or an increase in the interest rate on your home loan, a mortgage modification may be the key to staying in your home. If you are eligible for the modification, visit this website to find out if your lender has a contract agreeing to participate in the Home Affordable Modification Program.  

3.     Another option for homeowners who are not able to stay in their homes is through the Home Affordable Foreclosures Alternative. If you sell your home through a short sale or deed-in-lieu of foreclosure, you may receive up to $3,000 to help with relocating to a more affordable residence. Visit http://www.makinghomeaffordable.gov/hafa.html to find out more information.

Eligibility for all programs is different. To determine whether you qualify go to http://www.makinghomeaffordable.gov/eligibility.html and click on the link under the program you are interested in. 

If you need assistance with your mortgage and understanding the different options available, talk to a Department of Housing and Urban Development (HUD) approved housing counseling agency near you. Also, foreclosure and loan modification scams are increasing in numbers. Be wary of anyone who offers to “save” your home or lower your loan payment “for a fee”.

For more information about any of these programs visit www.makinghomeaffordable.gov.

Bremerton, WA ‐ State Representative Larry Seaquist (D‐26th District) visits local Credit Counseling Agency on impact of housing and credit crunch.

Rep. Seaquist, concerned with the economy and the impact on both low and middle income families, met with Hank Keaton, President of American Financial Solutions (AFS) and AFS staff to learn, first hand, about the impact of current economic stress on Washington residents. AFS, a nonprofit credit counseling agency in Bremerton, provided financial education and counseling on credit and housing issues to over 30,000 consumers in the last year.

“What are you hearing from Washington families and what do you see about their future as we work through the slowing economy?”, Seaquist asked. “Many of the people we talk with have little or no savings and carry significant credit card debt”, said Barbara Mascarin, Operations Director at AFS. “Then when the price of energy and groceries rose so dramatically, they couldn’t make their payments.” Representative Seaquist said, “About three blocks from here, I met a woman that said she had just started to use her 401k savings to buy groceries.” Mascarin added, “If their variable rate mortgage resets, they are pushed over the edge. We see this housing impact continuing to have a domino effect on family budgets for at least two more years.”

Trained and certified credit counselors empower callers with education, resources and tools to
get control of their debt. Bob Denend, a certified credit counselor, explained, “Because of the
downturn in the economy related to the housing and energy crisis, the disposable income just
isn’t there anymore. Once a budget is put in front of people in black and white, they can see
where they stand and quite often it’s not as bad as they perceive it to be. People need to know
that they are not unique to this situation and that there is a solution. Often times it comes by
doing several things, not just one.”

A quick look at Washington Foreclosure Statistics*

• Foreclosure filings have increased 10% between May 2008 and June 2008. They have increased 69% since June 2007.
• Washington State ranked 20th in the nation in total properties with foreclosure filings reported.
• Average statewide foreclosures: 1 of every 977 households.
• County foreclosure filings:

Pierce County; one in every 483 households ‐ twice the state average.
Kitsap County: 1 of every 839 households.
King County: 1 of every 1125 households.

In response to increasing consumer debt and rising foreclosure filings within the State, AFS has
added Pre‐Purchase Housing Counseling, Foreclosure Intervention and Assistance Counseling,
and will soon add Bankruptcy Counseling to its existing services.

These are remedial services and Rep Seaquist agreed that real prevention lies in Financial
Literacy training and that training should start in schools as early as possible. AFS provides free
educational materials, workshops and classes on making the most of personal income, developing a budget, and managing credit and debt. More information about counseling services, money management courses and debt management programs are posted on the AFS website http://www.myfinancialgoals.org/.

*Data Source: RealtyTrac U.S. Foreclosure Market Report

When the bank receives title to the foreclosed home, they usually file a claim with the existing home owner’s insurance company to cover damage and missing real estate property items. People who strip or vandalize their home are likely to have the homeowner’s insurance company pursue and prosecute them when the bank faces a loss due to the seller’s intentional behavior.

Personal property are items that are not real estate and it is permissible to sell these items or to take them with you. Personal property may include; furniture, small appliances, mirrors, personal items, throw rugs, portable heaters, etc. Fixtures are considered real estate because they are affixed to the land or to the house, and they are not considered personal property which means fixtures stay with the house. Fixtures include items such as; ceiling fans, stoves, built-in-microwaves, dishwashers, pipes, wiring, sink drains, flooring, etc.

My best advice; we have three basic needs – food, water and shelter. When one of these needs is threatened, it can lead to high stress levels and cause a lack in good judgment and decision-making abilities. Before reacting emotionally to a foreclosure with physical behavior, get help. HUD (Department of Housing and Urban Development) offers information and referrals to your local Housing Counseling Agency that may be able to help you find affordable housing solutions and provide counseling to help cope with the loss of your home. You can also contact one of our Certified Credit Counselors who will help you complete a budget analysis and provide you with recommendations or referrals to help you improve your situation.

Many, if not most of these reports state the importance of keeping in contact with your mortgage lender once you are falling behind. What is sometimes left out, however, is the importance of keeping your lender informed any time you even suspect there is a possibility of being late on a payment.

A client of mine was having severe financial difficulty due to job loss and medical conditions. They realized that their most important asset, their home, could potentially be at risk. Even though they were able to make their mortgage payment, I emphasized to them to let their lender know what was happening, and the struggles they were facing.

Remarkably my client was able to keep the mortgage current for 6 months, even though the financial picture became bleaker each month. But each month the client was in touch with the lender, letting them know that the payment may be slightly late but they were doing everything they could to make the payment.

Finally the financial situation deteriorated to the point that the mortgage payment definitely could not be made. Of course, the client immediately contacted their lender, fully expecting to hear the “you have to make your full payment” comment they had heard from other creditors.

To their delight, the mortgage lender stated, “Since you have been so good at keeping us informed, we will be more than happy to work with you.” The result? The mortgage was completely renegotiated, and the payment was literally cut in half!

While this is an unusual result- you can’t expect all mortgage lenders to be this generous- it points out that being proactive on your mortgage, any time you are in financial trouble can be well worth the effort!

Written by Steve Axtell, Certified Credit Counselor