Getting Your Piece of the $25 Billion Federal Foreclosure Prevention Program
NEW YORK ( MainStreet) In the month of July alone, 3.2 million people were more than 30 days past due on their mortgage payment but not in foreclosure, according to Lender Processing Services (LPS).
"This includes everyone from people who've missed just one mortgage payment who can very quickly get caught up on their loans to the folks who are seriously delinquent at 90 days or more past due but not yet in foreclosure," said Mitch Cohen, spokesperson for LPS. "The tricky thing about the seriously delinquent is that they can linger there for a long time. Depending on the state, it can be two to three years."
While more than 4 million Americans have lost their homes since 2008, the Obama Administration's efforts to help families avoid foreclosure and strengthen the housing market recovery includes the foreclosure prevention program Making Home Affordable, which is free of charge.
The Homeowner Affordable Modification Program (HAMP) is the primary mechanism of the federal Making Homes Affordable initiative, according to Steve Rasmussen, an attorney in Irvine, Calif. HAMP was launched in 2009 to help distressed homeowners avoid foreclosure.
"When homeowners qualify, the program can reduce their monthly mortgage payments by lowering the interest rate charged on the loan," Rasmussen told MainStreet.
More than 1 million homeowners nationwide have already benefited from the $25 billion Making Home Affordable Program and thousands more are still eligible for help.
"The money was put in place to help struggling homeowners. Part of the money is a settlement because lenders did not follow guidelines in 2008. The banks are now paying for a portion of this program through that settlement," said Tanisha Warner, media relations specialist with Money Management International, a credit counseling agency assisting homeowners with completing and submitting application material to their mortgage company to qualify for the free program.
Homeowners struggling with their mortgage payments often delay reaching out for help because they feel overwhelmed and unsure of where to turn. Still others paid for help only to discover that they are victims of a scam.
"Homeowners are defrauded by companies offering to assist them in obtaining a loan modification by charging large upfront fees," said Rasmussen.
Most recently, the Ninth Circuit Court of Appeals allowed the class action lawsuit Corvello v. Wells Fargo Bank to move forward. The law firm Blood Hurst & O'Reardon alleges that in 2008 Wells Fargo improperly denied struggling homeowners offers for permanent home loan modifications as they were required to under HAMP.
According to TransUnion's 2013 Q2 report, there are 44 million home mortgages in the U.S. The national mortgage delinquency rate is currently at 4.09%, which equates to 1.8 to 2 million delinquent home mortgages.