Making Home Affordable

This section details the guidelines that have been put forth for the various programs under the Making Home Affordable (MHA) Program. These guidelines are applicable to all eligible mortgages not backed by government-sponsored enterprises (GSEs) that are on owner-occupied single-family properties of one-to-four units.

The Home Affordable Modification Program (HAMP)

Under HAMP, eligible borrowers can modify first-lien mortgage loans at more affordable payment levels. The participating loan servicers will apply a uniform modification process that will reduce interest rates, extend terms of the mortgage, and/or offer forgiveness or forbearance for principal, thus making the first-lien mortgage affordable for the homeowner.

Home Affordable Unemployment Program (UP)

The Unemployment Program gives unemployed homeowners a forbearance on their mortgage payments lasting three months or more. During this period of paused or reduced payments, borrowers have time to secure employment without worrying that their homes will be foreclosed upon.

Home Affordable Foreclosure Alternatives Program (HAFA)

This program uses a deed-in-lieu of foreclosure (DIL) or a short sale to allow for a transition for the struggling borrower to a more affordable housing option. HAFA averts a foreclosure on the borrower's property if it has been purchased with a loan that qualifies for HAMP, by offering incentives to all parties affected by the loan.

Second Lien Modification Program (2MP)

If the borrower has their first lien modified under HAMP and a second lien has been taken out on the same property, the borrower can have the second lien fully or partially extinguished if the servicer is participating in 2MP. In this case, the lien must not be owned or backed by a GSE. Utilizing 2MP together with HAMP provides additional affordability to the borrower -- the servicer of the second lien doesn't even need to participate in HAMP to be able to offer 2MP.

Government Loans

Several government housing agencies have issued their own guidances on HAMP for mortgage loans they guarantee or insure; these include the Federal Housing Administration (FHA), the Rural Housing Service (RHS) and the Veterans Affairs Department (VA).

The Treasury FHA-HAMP program and RHS's RD-HAMP program are both modification options that compensate borrowers on loan performance and compensate servicers on loan success. Non-GSE mortgages backed by these agencies can qualify for modification. VA-HAMP also assists borrowers who cannot keep up with their loans if they are guaranteed by the VA, but does not offer compensation as an incentive.

Treasury/FHA Second Lien Program (FHA2LP)

The Treasury/FHA Second Lien Program works in tandem with the FHA Refinance program, which gives borrowers who owe more than their home is worth the opportunity to restructure their loans into FHA-insured mortgages. To this end, FHA2LP applies when the borrower has taken out a second lien on his or her home. Through the program, the Treasury grants second-lien servicers and investors certain incentives to extinguish the lien in part or in full. Servicers can participate in FHA2LP provided the second lien is a non-GSE mortgage, and they are not required to have serviced the first lien or taken part in the HAMP program.

The MHA and the Hardest Hit Fund (HHF)

The so-called Hardest Hit Fund is designed to give federal funding and resources to state Housing Finance Agencies (HFAs) to put innovative programs into effect that will stem foreclosures in especially vulnerable housing markets across the US. In certain cases, these programs may be directed at the same borrowers targeted by the Making Home Affordable Program and may well overlap with some MHA initiatives.

Although HFAs have been dissuaded from directing their programs at borrowers who were already eligible for HAMP or another MHA program, the HHF programs may in fact interact with some aspects of MHA. Mortgage servicers should make sure that all relevant federal funds are used in an efficient manner and that the HHF programs are complementary to MHA programs, so that more borrowers can be covered and more foreclosures can be resolved or prevented.