New Government Program Keeps Borrowers in Their Homes

When the housing bubble burst in 2006-2007, observers attributed the jump in foreclosures to subprime and exotic mortgages made on properties that depreciated significantly just a year or two later.

Foreclosure rates are still alarmingly high, but now the problem is more the result of a bad economy than bad loans.

In response, the Obama Administration, in March 2009, launched the Making Home Affordable program. The program focuses on making monthly mortgage payments more affordable through either a lower-rate refinance or a loan modification that would bring payments down to 31% of monthly gross income.

While previous foreclosure prevention efforts were seen by some as ineffective, servicers now have the tools and the guidelines they need to keep borrowers in their homes. So, whether you're still holding on to a subprime or exotic mortgage or you're one of the millions of workers who has lost work, there's new hope for saving your home.

Visit MakingHomeAffordable.gov to determine your eligibility for either a refinance loan or a modification and to find out if your servicer is participating in the program.

If you find you are eligible, be patient. Some of the first borrowers to contact their servicers have complained of long waits and unresponsiveness. Program officials and housing counselors are asking homeowners to bear with them as servicers roll out the new program. Regardless of delays, do contact your servicer now if you're struggling.

If you find out you don't qualify for the Making Home Affordable program, and you're not a Harvard Credit Union member, contact your servicer to discuss internal "workout" options. The key is contacting the lender sooner rather than later. You can find contact information for your lender or the servicer, which collects mortgage payments on behalf of the lender, on your monthly billing statement or in your payment coupon book.

Housing counseling agencies approved by the U.S. Department of Housing and Urban Development (HUD) to provide default or delinquency counseling are another source of help. A housing counselor can help you narrow your options and weigh the pros and cons of each one. He or she might also make the Making Home Affordable process more comfortable for you if you don't want to deal directly with your lender or if you're having trouble navigating the system.

If your mortgage is with Harvard University Credit Union, contact us soon so we can help you explore your options. You can stop by any of our branch locations, email us or call us at (617) 495-4460.

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