President Obama on Monday announced a major overhaul to the Home Affordable Refinancing Program (HARP) in an effort to help those facing foreclosure. The move is also aimed to stimulate the national economy, generally, as the avoidance of foreclosures means less REO ("real estate owned" or bank owned) property and improved investment and expenditure. HARP was intended, when originally passed in 2009, to do these very same things, but the program has far under performed. Some of the reasons for failure seem to be addressed in this 2011 iteration.
Specifically, the White House issued this press release (even though it is in blog format, when it comes from whitehouse.gov, this Doylestown bankruptcy lawyer deems it a press release). One of the greatest criticisms of the 2009 HARP is that it alienates too many homeowners through its underwater cap of 25% (meaning that HARP is only available to those who owe no more than 25% greater than the current value of their home). The new HARP should expand this limitation to 50%. It will also eliminate the need for, and expense associated with, a new appraisal (with limitations) as well as expand the duration of the program.
Bankruptcy can be an alternate solution to help one avoid foreclosure. A Chapter 13 bankruptcy, which we do at the King Law Center, a Doylestown bankruptcy lawyer, will allow a debtor to catch up on their mortgage arrears over the period of the repayment plan (generally 60 months). Chapter 13 does require steady, and provable, income (as it is called a "wage earner's plan"), so a job or business is a prerequisite to qualifying. And the amount one must pay in the Chapter 13 bankruptcy plan is subject to approval from the court. This approval can be quite intricate and the assistance of counsel can truly help get a plan approved.
Chapter 13 bankruptcy also allows for a so-called lien strip on real property, if certain factors apply. Specifically, if one has a second mortgage and the balance on the first mortgage exceeds the current fair market value of the home, that portion of the second mortgage which is unsecured can be treated akin to credit card debt in a Chapter 13. This means a Doylestown bankruptcy Chapter 13 repayment might save you tens of thousands of dollars with respect to your junior or second mortgage, as well as save you tens of thousands of additional dollars when you receive the discharge at the end of the repayment plan.
We certainly hope that the 2011 version of the HARP will assist many homeowners save their homes, but consider bankruptcy as an alternative if this or other options fail. As a Doylestown bankruptcy attorney, we can help. Call with questions and see if bankruptcy can be a solution to your debt, or "mortgage lates," problems.
