Decreasing Debt: HARP and HAMP

If your mortgage is owned by the mortgage giants Fannie Mae or Freddie Mac, or if the loan is guaranteed through mortgage backed securities through these companies, it’s possible that you will be eligible to refinance through the government’s Home Affordable Refinance Program (HARP). HARP is not a loan modification program, but a refinancing program; as such, it essentially negotiates a new loan, at more favorable terms for the borrower. If you are delinquent and need a different solution, the Home Affordable Modification Program (HAMP) is a good foreclosure alternative for someone facing underwater mortgages and massive mortgage debt.

Foreclosure Alternatives for Reducing Debt

HARP is a program intended for people who are current on their mortgage payments, but whose homes have decreased in value during the current market downturn. HAMP, on the other hand, is a loan modification program for delinquent borrowers who have been unable to meet their mortgages’ payment requirements. Unlike HARP, HAMP is not limited to Fannie Mae or Freddie Mac-backed mortgages, either. Another great benefit of HAMP is that under the current law, your loan servicer may be required to offer loan modification before moving into foreclosure proceedings.

In short, HARP offers favorable refinancing terms for borrowers who are current on their mortgage payments, but whose homes have lost value and may be worth less than the value of the loan. HAMP offers loan modification options for those whose mortgages have gone into non-payment status and who may be facing foreclosure, and as such, HAMP is offered as a foreclosure alternative. Depending on the nature of your mortgage debt and the specifics of your situation, a foreclosure attorney can help decide which financial step you might take next.