Reader: How Do I Make Use Of the HASP?by Tim Manni
A visitor to HSH.com submitted a question yesterday regarding Washington’s latest plan to improve the housing market.
Question: In the April 1 edition of “Bottom Line” you refer to the “Homeowner Affordability and Stability Plan”. How can I avail myself of the plan?
HSH Vice President Keith Gumbinger wrote a three-page feature in the April 1 edition of the periodical ‘Bottom Line Personal’ titled “Mortgage Rescue Plan — How You Can Benefit.” Here’s an edited version:
The Homeowner Affordability and Stability Plan (HASP) is designed to help homeowners who are facing foreclosure as well those who are struggling to make payments. The program is divided into two parts: loan refinancing and modification.
Whether you plan to refinance or modify your loan, the process should start with you the homeowner contacting your servicer and discussing the nature of your loan.
Make Sure Your “Low Cost” Refinancing Ensures Savings
Borrowers must have a Fannie Mae or Freddie Mac-owned loan to participate in the refinance portion of the HASP. Under the current circumstances, it’s only best to refinance if your current rate is 6.5% or higher — the savings from your new low rate should be substantial enough so that you may recoup your closing costs within two years or less. Moreover, adjustable rate borrowers should also seek out this program if their rate is likely to adjust higher before they plan to sell their home.
Incentives Make Modifications Enticing For Both Parties
Both the borrowers and the lender can benefit from the loan modification portion of the HASP. Your lender and the Treasury Department will work together to bring your mortgage payment down to 31% of your gross monthly income before taxes for up to five years.
Servicers are motivated by the $1,000 up-front payment they receive for each modified loan, as well as up to an additional $1,000 a year, for three years, if the borrower can stay current on their new loan. Borrowers, if you can stay current on your loan, you can receive up to $1,000 a year for five years.
For more information on this subject — such as eligibility and which type of loan you have — visit http://makinghomeaffordable.gov
For those borrowers who may not qualify for these initiatives, contact your lender — a refi or modification may still be available.