Many home mortgages across the nation are owned by Fannie Mae, which is a private company that is financially sponsored by the U.S. government. If your mortgage is owned by Fannie Mae and you are having difficulty making your payments, there are several types of mortgage relief programs available that might help you.
The Home Affordable Refinance Program allows you to replace your current mortgage with a new, more favorable one. The new loan will lower your payments either by reducing your interest rate or increasing the number of payments, or both. To be eligible, you must be current in your payments and not have paid late in the last six months. Your mortgage balance must be higher than the current market price of your home. You will need to be able to qualify for a new mortgage, with good credit and sufficient income.
The Home Affordable Modification Program is available if you are not eligible for refinance due to financial hardship, such as from losing your job or medical expenses. You need to show that your hardship is long term and that you cannot afford to make your current payments. Also, your mortgage must have started before Jan. 1, 2009. The modified loan will result in payments of no more than 31 percent of your family gross income. This is accomplished by lowering the interest rate and stretching the number of years to repay.
Deed for Lease
If your financial situation is such that you cannot qualify for either the refinance or modification program, Fannie Mae can still help you to stay in your home. To be eligible, your home must pass a property inspection by Fannie Mae. Then, you will need to sign a deed in lieu of foreclosure that transfers the home ownership to Fannie Mae. In return, you will receive a lease for 12 months at a fair market rental amount. You may be eligible for a lease extension as well and no security deposit needs to be paid.
If you are not eligible for HARP, HAMP or the rental program or you do not want to stay in your home, but don't want a foreclosure, you can try the HAFA option. The Home Affordable Foreclosure Alternative program is an assisted short sale solution. In a short sale of your home, you sell the home for less than your mortgage balance. You will not be responsible for the unpaid portion of your mortgage, and you will be eligible for relocation assistance and another Fannie Mae mortgage in two years.
Kerry Zias has been a strategic business consultant and college instructor of business administration courses since 1990. He has taught courses and performed professional consulting work in the areas of marketing, management, business start-ups, entrepreneurship, real estate, sales psychology and performance, business communications, business law and political/governmental relations. Zias holds a Master of Business Administration in marketing from National University.