How can HAMP Save a Home From Foreclosure?

In 2008, the real estate market nearly collapsed and resulted in the economic crisis that is still reverberating years later. Many people were suddenly unemployed, some with increasing mortgage payments they could no longer pay for. Banks initiated mass foreclosure proceedings and former homeowners were left broke and homeless.

Eventually, the government created the Making Home Affordable Program to try to prevent more homeowners from losing their homes.

The Making Home Affordable Program at a Glance

There are 4 potential options for homeowner relief under the government's effort to help financially distressed homeowners. They are:

• Mortgage loans refinancing through the Home Affordable Refinance Program (HARP)

• First and second mortgage loan modification through HAMP & the Second Lien Modification Program (2MP)
• Temporary relief to unemployed homeowners through the Home Affordable Unemployment Program (UP)
• Alternative scenarios to foreclosure through the Home Affordable Foreclosure Alternatives Program (HAFA)

State law may also provide some relief and procedural safeguards to homeowners before a foreclosure action will proceed in court. Make sure to find out whether the court may require a settlement conference or some other opportunity to assist homeowners before concluding that losing your home is inevitable.

HAMP Assistance

The government legislation offers incentives to lenders and loan servicing companies to participate in the program. Aside from this, banks are not benefited from massive foreclosures since that means never getting paid for mortgage loans.

Participating providers can not refer a loan for a foreclosure sale or continue with a foreclosure sale on the loan unless the homeowner has been considered for HAMP and, in some cases, received a trial modification offer. The providers must use reasonable efforts to contact homeowners in danger of foreclosure, including the possibility of face to face contact.

In addition, the provider may not conduct a foreclosure sale while the loan is being considered for modification or while the trial period is taking place. Once the homeowner has paid the first payment under the trial period plan, the provider may not take the first legal action to initiate a new foreclosure.

These rules are in place to encourage honest dealings with homeowners and give the program the legitimacy needed to encourage other homeowners to make efforts to participate.

Getting Legal Counsel

Before seeking out assistance under the HAMP program, it is best to consult with a licensed foreclosure attorney in your area. The attorney can determine whether a HAMP program would be best for your situation.