In early 2012, the Obama Administration announced important enhancements to MHA that will expand the pool of eligible borrowers. These enhancements include:
- Extending the MHA program deadline for an additional year – until December 31, 2013.
- Expanding eligibility criteria so the program can reach more people who are struggling with additional debt such as second liens and medical bills. This involves offering another evaluation opportunity with more flexible debt-to-income criteria.
- Expanding eligibility to include properties that are currently occupied by a tenant or which the borrower intends to rent. This will provide critical relief to both renters and those who rent their homes, while further stabilizing communities from the blight of vacant and foreclosed properties.
- Increasing incentives for principal reduction. Reducing principal is an important tool for providing sustainable modifications for underwater borrowers. The new principal reduction enhancements are designed to encourage lenders and investors to reduce principal amounts by:
- Tripling the incentives investors receive for principal reduction on first liens; and
- Doubling incentives for principal extinguishment on second liens.
- Offering to pay Fannie Mae and Freddie Mac the same incentives for principal reduction on loans in their portfolios.
While the economy continues to shows signs of recovery, the broader housing market remains fragile. HAMP continues to offer homeowners some of the most sustainable assistance available and has established critical standards and protections for homeowners.
Extending the reach of HAMP will assist a broader pool of struggling homeowners, offer support for tenants at risk of displacement due to foreclosure, and provide more robust relief to those who participate. Taken together, these enhancements will help the housing market recover faster from an unprecedented crisis.