Federal Programs for Mortgage Relief and Refinancing

Written by: Christy Rakoczy

In 2010, for the first time in history, there were more than 1 million foreclosures in the United States.  Foreclosure is a devastating experience for the homeowner and an undesirable experience for a lender who doesn’t want to be in the business of repossessing and selling houses.  The foreclosure crisis has devastated the real estate market in the United States and the federal government has taken action to try to help many homeowners save their homes.

Federal Programs for Mortgage Relief

The federal government has designed several federal programs for mortgage relief to help people avoid foreclosure or make their home payments more affordable.  These programs cater to different segments of the population, but all share the same goal: avoiding foreclosure and helping people keep their houses.

The Making Home Affordable Program

Many of the options the federal government has made available are found in US Government’s “Making Home Affordable Program” (MHA).  This program provides federal programs for mortgage relief, helping homeowners to:

  • Lower their payments by participating in the Home Affordable Modification Program (HAMP);
  • Lower mortgage rates or convert an adjustable rate mortgage to a safer fixed rate loan by taking advantage of an MHA refinance program such as the Home Affordable Refinance Program (HARP);
  • Obtain assistance if they become unemployed;
  • Obtain assistance if they owe more on their homes than the homes are worth;
  • Get help with home equity loans, home equity lines of credit and other second mortgages or liens.  One program that provides assistance with this is the Second Lien Modification Program or 2MP as it is also called.
  • Get help with fallen property values; and
  • Leave a home without foreclosure and with the help of $3,000 in relocation assistance.



Eligibility for federal programs for mortgage relief varies significantly among the programs because the criteria are based on the specific aid being provided.  For instance, to be eligible for the HAMP program, individuals must own a property that is serving as their primary residence.  The property can be a single family home or have up to four units.  The owner must have obtained a mortgage prior to or on January 1, 2009.  The amount of the first mortgage cannot exceed $729,750 for a single-family home (multi-family homes have higher limits) and the current mortgage payment (including taxes, interest, homeowners insurance and homeowners association costs) must exceed 31 percent of monthly pre-tax income.

To be eligible for HARP, on the other hand, you also have to have a property that is can range from a single family and to a four-unit property.  For this program, however, your mortgage must be owned or guaranteed by either Fannie Mae or Freddie Mac.  You also must be current on your payments at the time of applying and you must not have been in excess of 30 days delinquent on payments any time in the prior 12 months.  The first mortgage may not exceed 125 percent of your home’s current value.

Other federal programs for mortgage relief

The Hope for Homeowners Program predates the Making Home Affordable Program and was passed as part of the Housing and Economic Recovery Act of 2008.  The Hope for Homeowners Program allows eligible homeowners to obtain fixed rate 30 year mortgages from the FHA, however few homeowners have taken advantage of the option, in large part due to high fees.

Individual states may also offer programs that can provide you with help and your lender may be able to point you in the right direction.  Believe it or not, lenders don’t want to foreclose and may even be offering their own programs to help you keep your home.

How to Get Help

If you are in need of federal programs for mortgage relief in dealing with a mortgage you cannot pay, there are a number of places you can turn for help including

  • The Making Home Affordable Program website to learn more about all of the programs offered within MHA, including HAMP and HARP.  A brochure describing different types of aid offered through MHA is also available in PDF form and explains in detail the different sources of aid and eligibility requirements for each.
  • The website of the Department of Housing and Urban Development, which provides details on foreclosure prevention alternatives including the Making Home Affordable Program.

You may also schedule an appointment with a HUD approved housing counselor or at the Federal Housing Authority (FHA) outreach center in your local area or speak with HUD or FHA staff vie telephone or email to understand your options under various federal loss mitigation programs.


Federal Programs for Mortgage Relief and...

Share Tweet Pin It