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This week, the Administration announced three new housing initiatives aimed at building on our efforts to connect struggling homeowners to the Administration’s foreclosure prevention programs. Our goal is to ensure that responsible Americans who qualify for federal mortgage assistance have the necessary information to benefit from the programs available to help them avoid losing their homes.
In response to the historic foreclosure crisis, President Obama put in place foreclosure prevention initiatives that helped millions of struggling homeowners stay in their homes and strengthen the ongoing housing market recovery. These actions include:
- Expanded principal reduction through the national mortgage settlement and tripled principal reduction incentives in HAMP. This has collectively helped more than 300,000 families and contributed to 1.7 million coming above water on their mortgages in 2012.
- Expanded refinancing through Home Affordable Refinance Program (HARP 2.0).This has dramatically increased the number of families receiving HARP refinancing from 400,000 in 2011 to 1.1 million in 2012 – a 164.5% increase.
- Helped 6.1 million households modify their mortgages through Home Affordable Modification Program (HAMP), Federal Housing Administration (FHA), and other private sector modifications based on the HAMP template.
Due in part to these Administration efforts, the housing sector has begun to heal. Home prices are rising at the fastest pace in six years. New building permits rose to 939,000 in February – the largest number since June 2008. And supply overhang is steadily falling as more Americans are purchasing homes.
But there is much more work to be done to build on this progress and help responsible homeowners stay in their homes. That’s why we are still pushing for new ideas to help homeowners. Since 2009, the Obama Administration has hosted 83 homeowner outreach events across the country and 10 stakeholder forums at the White House with homeowners, housing counselors, community advocates, and experts to solicit ideas on how to accelerate the housing recovery and help struggling borrowers.
As a direct consequence of these conversations, the Administration is announcing three new housing initiatives that will connect American homeowners to the Administration’s foreclosure prevention programs:
While we are encouraged that the housing market is on the path to recovery, our job is far from finished. There are still many struggling homeowners who need assistance. By connecting eligible homeowners with existing foreclosure prevention programs, our new counseling initiatives will enable more borrowers to remain in their homes and go a long way in ensuring a brighter economic future for these families.
- First, the U.S. Department of the Treasury is partnering with NeighborWorks® America and participants in its National Foreclosure Mitigation Counseling program to increase outreach and support for struggling homeowners seeking assistance through the Making Home Affordable Program. Making Home Affordable includes the Home Affordable Modification Program (HAMP), which reduces monthly payments by a median of more than $540 each month and thereby effectively prevents foreclosure. Through the new initiative, housing counseling agencies will help struggling homeowners successfully complete and submit application documents to their mortgage company free-of-charge. These agencies will also develop and implement strategies to raise awareness of the program among potentially eligible homeowners, especially those in historically underserved communities.
- Second, the Department of Labor is leveraging existing state infrastructure by encouraging American Job Centers across the country to inform unemployed homeowners about federal foreclosure prevention options available to them, including unemployment forbearance through HAMP, which allows qualifying unemployed homeowners to reduce or suspend their mortgage payments for up to 12 months. This enables them to focus on finding a job without worrying about how they will keep up with their mortgage payments.
- Finally, the Department of Housing and Urban Development has officially launched its Housing Counseling Office, which was established by the Dodd-Frank Wall Street Reform and Consumer Protection Act. Through its network of 2,500 HUD-approved housing counseling agencies, the Office offers at-risk homeowners free and/or low cost information about foreclosure prevention and loan modification programs. The Office also provides individuals and families with more general advice on buying or renting a home, dealing with foreclosures and credit issues, and avoiding frauds or scams.
Wayne Ting is a Policy Advisor at the National Economic Council