The Making Home Affordable (MHA) programs are ending on Dec. 30 and 31 (depending on the specific program), which means from those dates forward there will be no federally funded relief programs available for homeowners. With the housing market and the overall economy still on shaky ground, this could be especially damaging for homeowners in Las Vegas, where foreclosure rates are still high.
Understanding the TARP and MHA
The Troubled Asset Relief Program (TARP) is a national government program created in 2008 in response to the subprime mortgage crisis. While this program was primarily geared toward bailing out banks and other major corporations, some relief also extended to underwater homeowners.
There are multiple homeownership preservation programs that fall under the TARP umbrella, including the MHA, which was created in 2009.
The MHA includes the following key components
• Home Affordable Modification Program (HAMP): HAMP helps homeowners lower their monthly mortgage payments if they are struggling to make payments due to financial hardship and/or are delinquent or in danger of falling behind on their payments. The deadline for applying for HAMP is Dec. 30.
• Home Affordable Refinance Program (HARP): HARP helps underwater homeowners refinance their mortgages. People who are current on their mortgage and have Fannie Mae or Freddie Mac loans may be eligible for this program. The deadline for applying for HARP is Dec. 31.
• Home Affordable Foreclosure Alternatives Program (HAFA): HAFA helps homeowners who are at risk of foreclosure execute a short sale of their home or receive a deed-in-lieu of foreclosure. The deadline for applying for HAFA is Dec. 30.
How does this affect Nevada?
Another component to the MHA is the Hardest Hit Fund (HHF), which provides additional funding to states with especially high foreclosure rates. Nevada was included in the HHF, and while many other states have since recovered, homeowners in Nevada have yet to fully bounce back.
RealtyTrac reported that by the end of 2015, 27.7 percent of Nevada homeowners were underwater, the highest percentage of underwater homes within a U.S. metropolitan area.
The Nevada Foreclosure Mediation Program (FMP) program was created in 2009 as another resource to help homeowners in the state who were facing foreclosure. This program forces banks to the table to negotiate and helps the homeowner and bank find a mutually acceptable outcome. Along with the programs noted above, there is talk that the FMP also may be ending in 2016.
What happens when these programs end?
If your home is underwater or your mortgage is past due and you haven’t obtained a loan modification or refinance to retain your home, or short sold to surrender your home, time is running out to take advantage of these programs.
People who have been accepted will remain in the program while it sunsets, and the application deadlines for everyone else are Dec. 30 and 31. However, it can take months to get accepted, so it’s important to apply as soon as possible. Furthermore, there will likely be a rush on applications during October and November, making this summer and early fall the best chance for homeowners to fix mortgages, reduce unpaid principal balances or liquidate homes.
Will there be more of these programs in the future?
There will probably still be short sale and loan modification programs, but it’s unlikely that they’ll be backed by the federal government. They will probably be harder to get, have less favorable terms and be more expensive in the short term and long term.
Please note: The information in this column is intended for general purposes only and is not to be considered legal or professional advice of any kind. You should seek advice that is specific to your problem before taking or refraining from any action and should not rely on the information in this column.