By Deborah Higgins, INFOTRAK National Data Services

In an attempt to further help distressed or “underwater” homeowners, the U.S. Government has modified the Making Homes Affordable Program.  The modifications will focus on providing temporary relief for homeowners who are unemployed and provides special consideration for those homeowners who are “underwater” (i.e. mortgage loan balance is greater than the current value of the home). 

The program will attempt to accomplish these goals by: 

1)      Providing financial incentives to lenders that cut the balance of the borrower’s mortgage loan (lenders to reduce principal owed on the loan if the amount of the loan is more than 15% more than the home’s current worth);

2)      Doubling the amount it pays to lenders who help modify second mortgages (i.e. “piggyback” loans and Home Equity Lines of Credit);

3)      Increasing the incentives paid to lenders who find a way to avoid foreclosing on delinquent borrowers, even if these borrowers can’t qualify for mortgage relief;

4)      Relying on the FHA more heavily to help “underwater” borrowers who are still keeping up their payments.  The goal is to help these borrowers refinance into more affordable mortgage loans.  The FHA will offer incentives to the lenders that reduce the amount borrowers owe on their primary mortgages by at least 10%.

The Government hopes that these new modifications/lender incentives will help up to 3-4 million “responsible” homeowners through the end of 2012 and provide more stability to the still shaky housing market.  To learn more about the Home Affordable Modification Program and see if you might qualify for a loan modification, visit www.hud.gov or talk to your mortgage servicer.

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