The United States decided to set up a federal program called the Home Affordable Modification Program which is also better known as H.A.M.P. This foreclosure prevention program was set up to enable eligible homeowner’s to apply for a loan modification that reduces the interest rate and may reduce or eliminate some or most of the principal on their mortgage debt. The reason that H.A.M.P. was started was due to the increase of foreclosures nationwide which caused increased mortgage debts that had become a significant crisis which had continued since 2008.
It was found that seven to eight million homeowners were struggling with mortgage repayments and therefore their homes were at risk of being foreclosed upon. Thus enabling homeowner’s and lenders to come to an agreement to which monthly mortgage repayments would be lowered.
Then at the beginning of February 2009, the Treasury Secretary Timothy Geithner, introduced the Financial Stability Plan, the aim of this plan was to help struggling families and individuals with foreclosure on their homes. The program called Making Homes Affordable has H.A.M.P. as part of it and was created alongside another program called the Hardest Hit Fund which was part of the Obama Administration’s plan for overall housing.
Then in March 2009 another program called the Treasury under the Troubled Asset Relief Program or TARP was created a part of the Emergency Economic Stabilization Act of 2008. Investors, lenders, mortgage servicers, lenders, the VA, FNMA, the FHA, FHLMC and the Federal Housing Finance Agency all came together to create the loan modification guidelines which lenders till this day now have to consider when they evaluate a borrower once they make an application for a loan modification.
Avoid Foreclosure and get a loan modification with lower payments.
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