Hardship Loan Modification or HARP Refinance Plan

by Sharon in Saint Peters, MO

Sharon asks Kate if hardship loan modification or HARP refinance plan is a better choice: The best protection for homeowners is to understand their mortgage options before calling a loan servicer or bank. Continue reading this letter from Sharon who doesn't want to depend on lending institutions to decide between modifying and refinancing her mortgage.


Hardship refinance? Modification? What do I ask for? What is available for my situation?

By Sharon in Saint Peters, MO
Hardship Loan Modification or HARP Refinance Plan


I am not sure exactly what I should be asking my lender for (or shopping with other lenders for) - or what I am actually eligible for.

If I understand correctly, due to newer rules, my hardship may make me eligible for this program. I was not previously eligible because my mortgage payments were below 38% of my gross income.

I have been divorced for about 9 months. I was awarded the home in the divorce. I contacted my lender several months ago about taking advantage of HAMP or HARP to reduce my mortgage payment amount due to hardship caused by my divorce and loss of over 50% of our household income.

I was told that I would first have to assume the mortgage to remove my ex's name - but would need to have made payments from my own separate account for 12 months before I could do this.

My home has appraised for $130,000 and the current mortgage balance is approximately $71,000.

My current mortgage payment including principle, interest, taxes and insurance is about 27% of my gross monthly income. However, this amount is a hardship because of other debts, expenses, and obligations.

I have about 15 years left on the current mortgage - and do not want to extend the term of the loan. 15 years will allow me to have the loan paid off at age 67, just in time for retirement - This is a major concern because my retirement savings are minimal due to being a stay at home mom for over 20 years and the divorce.

I hope this is enough information to determine what I may be eligible for and what I should be asking or shopping for. From what I have been reading online, I am not sure that I should trust my current lender to advise me about what would be most advantageous for me.

***zz-portrait-left.shtml*** Ask Kate answers: Hardship refinance? Modification? What do I ask for? What is available for my situation?

Hi Sharon,

I agree. Homeowners should not fully depend on a lender for direction when applying for a new mortgage, refinance, or a modification of current terms.

Ultimately, it is the responsibility of borrowers to educate themselves and understand their options. But because modification terms cannot be shopped among different lending institutions and refinance terms are difficult to compare, borrowers feel at the mercy of banks.

Thus, my website!

So I am happy, Sharon, that you've asked for various options because other homeowners have similar questions. Here are some suggestions to get the ball rolling toward lower and more affordable house payments.

Loan Modification, HAMP Hardship, HARP Refinance, 15 Year Mortgage and Retirement, Foreclosure Alternatives

  1. HAMP Modification: If the variable nature of a modification (the rate will likely adjust several times) are acceptable to you, call your loan servicer and tell them you want to modify the parameters of your existing mortgage. Don't let them discourage you from pursuing the program. Then after you apply, fully cooperate during the process and see if you can get approval.

    To understand what to expect during the modification process, go to HAMP Tier 2 Mortgage Modification News. But if you aren't pleased with the terms of the modification or are turned down by the bank, proceed to the next step.

  2. Modification without Hardship: You can also ask your loan servicer if they offer modification plans other than the HAMP program. If your mortgage is backed by Fannie Mae, you may be eligible for a modification that does not require a hardship.

    See the announcement at HAMP 2 Modification Hardship News in the blue box near the top of the page.

  3. HARP Refinancing: Otherwise, call your loan servicer again regarding the Making Home Affordable (MHA) HARP refinance program. I am not aware of hardship refinance (only hardship modification) but this should not stop you from asking your lender if they offer any such program to their existing customer base.

    Mention your estimation of the equity in your home because it could possibly affect your eligibility. But only an appraisal can determine this for sure. See New HARP 2 Loan Announcement for additional insight into this program.

  4. Shopping the HARP Refinance: When it comes to the HARP plan, you can shop and compare lenders, rates, and refinance fees. So after getting a quote from your current lender, go here for ways to shop and compare mortgage loan origination cost and avoid junk fees.

  5. 15 Year Mortgage and Retirement: Do not give up if the bank's underwriter will not approve your loan request for a 15 year mortgage. There may be another way to accomplish your goal to retire in 15 years. Go to Beat the Bank at Its Own Game.

  6. Foreclosure Alternatives: Lastly, not that I enjoy bringing up the subject, but there are several provisions for homeowners who cannot afford their house payments and are concerned that they are on the verge of mortgage foreclosure.

    For MHA foreclosure alternatives, start at Deed-in-Lieu of Foreclosure - $3000 HAFA Relocation Assistance. Then follow the links on that page to additional help, as you can do on most pages on my website.

Differences Between HAMP Loan Modification and HARP Refinance Plan

I am often asked about the differences between HAMP and HARP. Here are 3 related Ask Kate questions and answers that you will want to read also.

HARP 2 Refinance Plan with 2nd Mortgage: Amanda asks, Is it possible to default on the 2nd mortgage and still keep our home? We heard that we could use the HARP program to refinance our 1st mortgage and then once that was put into place, default on the 2nd mortgage.

Compare HAMP Modification to HARP Refinance: Walt says, I've just started the process for HAMP or HARP (not sure which yet, we're underwater on a ARM) using a nonprofit credit company (NovaDebt) who I contacted through the MHA web page as an approved advisor.

HAMP vs HARP 3 with Bankruptcy: Shelly begins, Like many others I am underwater in my mortgage, but current on my mortgage and home equity loan. I am currently going through a divorce and owe $248k on my primary loan and $39k on the home equity 2nd mortgage. The judge has ordered my ex only needs to pay half of the home equity payment and did not make him liable for the rest.

Best wishes,


Have You Seen These Ask Kate Answers

You are invited to ask Kate a mortgage question. Or you can post a comment by clicking the link near the bottom of this page. ***zzz-link-harp-news.shtml***

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