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The Making Homes Affordable Program, announced in March 2009, offers strong options for homeowners seeking alternatives to foreclosure and is part of the Obama Administration’s broad, comprehensive strategy to get the economy and housing market back on track.
There are many individual programs that make up the larger Making Homes Affordable initiative. The Second Lien Modification Program (2MP) is designed for homeowners who are struggling with payments in part because of a second lien on their home. For those who are eligible, the program offers a way to lower payments on their second mortgage. 2MP is a complementary program to the Home Affordable Modification Program (HAMP), so it is meant for those who have already modified their first mortgage through HAMP.
- You are eligible for the Second Lien Modification Program (2MP) if all of the following apply:
- Your first lien been modified under the Home Affordable Modification Program
- Your second lien originated on or before January 1, 2009
- Your second lien's unpaid principal balance more than $5,000 OR you have a pre-modification scheduled monthly payment of more than $100
- Your second lien payments are due while you are still paying your first lien
- Your second lien is insured, guaranteed, or held by any agency OTHER than a Federal government agency (e.g. FHA, HUD, VA, and Rural Development)
What do I need to do to be considered for 2MP?
Under 2MP, when a homeowner’s 1st lien is modified under HAMP and the servicer of the 2nd lien is a 2MP participant, that servicer must offer to modify or provide some level of extinguishment on the borrower’s second lien. The 2MP offer will be made in reliance on the financial information provided by the homeowner in conjunction with the HAMP modification and without additional evaluation by the second lien servicer.
Which servicers are participating in 2MP?
At this time, Citi, Bank of America, Wells Fargo, and Chase are participating
An update to the Second Lien Modification Program (2MP) was released on 3/26/10 and can be found here.
What is an SFR?
The complex details involved with short sales and foreclosures are unique calls for specialized expertise. Contact an agent such as myself that has earned the Short Sale and Foreclosure Resource (SFR) Certification through the National Association of Realtors and who is committed to guiding you through the process, setting realistic expectations, and helping you make the right decision to avoid foreclosure.
If you are in a situation where your home is “underwater” due to falling home prices, you are unable to make your current mortgage payments and you are considering pursuing options such as a short sale, deed in lieu of foreclosure, strategic default or even foreclosure, there could be drawbacks that I, as a real estate agent, cannot advise you on. For your protection, I suggest that all homeowners:
- Obtain legal advice from a competent real estate lawyer regarding deficiency judgments
- Call an accountant or CPA to discuss short sale and foreclosure tax ramifications
Except for certain conditions pursuant to the Mortgage Forgiveness Debt Relief Act of 2007, be aware the I.R.S. could consider debt forgiveness as income, and there is no guarantee that a lender who accepts a short sale or foreclosure will not legally pursue a borrower for the difference between the amount owed and the amount paid. In some states, this amount is known as a deficiency. A lawyer can determine whether your loan qualifies for a deficiency judgment or claim.
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