Hardest Hit Funds Principal Reduction Program

by Kendra U. from Lansing, Michigan

Ask Kate about hardest hit funds and principal reduction program: Are you a struggling mortgage borrower with a loan servicer that doesn't seem to care that you are about to lose your home? Learn about the funds allocated by the Treasury Department that do not require participation in Making Home Affordable program that could help you save your home.


Kendra asks Kate for Help to Save Her Home

Hi Kate,

I have been jumping hoops but am getting nowhere with my mortgage modification. I recently sent back my second Hardship packet in 6 months from my mortgage servicer.

Hardest Hit Principal Reduction Program Information
I also recently received my 2 month Breech of Default, missing December and January payments.

I am no longer able to work and my monthly benefits are insufficient to pay the previous 15 year mortgage. I am not positive but have a bad feeling the servicer is killing time before saying you are now under foreclosure.

I have asked for a loan modification since having to stop my career and completely quit working.

I have an appointment with a 'Save the Dream' statewide program to help homeowners try to avoid foreclosure. I am not at all thinking the mortgage servicer will work with this program to help me receive a monthly payment that I can afford.

I could afford half of the current monthly balance which was created with a 15 year mortgage. (The 30 year they had Really Encouraged, was not a good alternative I felt-since I would not be able to pay important monthly debt as well. It was $150 cheaper monthly and I would be paying this 'still too much payment' for 30 years vs 15.

Are mortgage servicers allowed to refuse all things the state appointed 'homeowner helpers' put in front of them?

I have already been told:

1. They do not have to offer any reduced payments, for example, one that would equal 31-38% of a client's gross monthly earnings.

2. They would not reduce any amount of the principal, NO principal reduction.

3. They do not have to participate nor would they offer a 'payment plan' vs the client's current monthly mortgage.

They would only be allowed to do a refinance at the best rate for the current day, nothing lower than what the current interest rates are at that time. They are sorry for my circumstances but that is The Best they can do!

It sounds like they want my home, what do you think? The appraisal would be approximately $20,000 higher than the mortgage balance.

Should I be immediately getting a lawyer or allowing the state program to do what they do at my upcoming appointment?

Also, this program to help homeowners has not returned my phone calls to see if they have received my information and the counselors sound like teenagers; what would you do?

I do not want to be in the streets because I was too naive in trusting either one to seriously helping my dire situation and I cannot work any longer because of physical disabilities being involved in a very serious accident. I am fighting the mortgage battle solo since my mate is no longer here.

Sincerely, Sleepless in Michigan

Kate Answers: Hardest Hit Principal Reduction Program

Ask Kate at Get-Your-Best-Mortgage-Rate.com
Dear Kendra,

Here is what stinks so badly for struggling homeowners with underwater mortgages combined with economic hardships.

Today's eligibility for programs to avoid foreclosure is highly dependent on the backer of your current mortgage.

Yet how many borrowers were asked if they preferred a Fannie Mae, Freddie Mac, or private investor mortgage in the past. Of course, very few! This decision was made for them.

Participation in HAMP Program

To answer your question, unless the loan is a Fannie Mae or Freddie Mac mortgage, participation in the HAMP program by lenders is voluntary.

This means loan servicers of non-Fannie and Non-Freddie mortgages are not obligated to offer a principal reduction program, payment plan, or reduced payments.

On the flip side, Fannie and Freddie do not participate in principal reductions which help to create affordable house payments. What a mess!

Hardest Hit Funds Program

But let's talk about the Hardest Hit Funds Program which I hope could benefit you.

In 2010, the Treasury Department allocated over 7 billion dollars to help struggling homeowners in the hardest hit states who are unemployed or underemployed. Additionally, the funds go toward principal reductions, elimination of 2nd mortgages, and relocation funds.

Besides Washington D.C., the eligible states for the Hardest Hit Funds are Alabama, Arizona, California, Florida, Georgia, Illinois, Indiana, Kentucky, Michigan, Mississippi, Nevada, New Jersey, North Carolina, Ohio, Oregon, Rhode Island, South Carolina, and Tennessee.

Now here is the best news. The homeowner does not have to go through Making Home Affordable Program to be eligible for the funds.

Call the Michigan Homeowner Assistance Nonprofit Housing Corporation for more information about the program in your state for struggling homeowners, A Step Forward at 866-946-7432. Incidentally, the headquarters are in Lansing.

For other Readers, if you live in one of the other eligible states or Washington DC, find out how to connect with your local Hardest Hit Funds and Principal Reduction Program. (You'll be moving to the US Department of the Treasury website.)

Very best wishes. I am pulling for you.

Sincerely,

Ask Kate

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