NORWALK, Conn.--(BUSINESS WIRE)--Even though more than one-fifth of mortgages are “underwater,” with the borrower owing more than the value of the home is worth, more than 7 in 10 respondents in a recent FreeScore.com survey said they were not aware of government mortgage modification programs designed to help such borrowers.
Analytics firm CoreLogic says that 22.1 percent of homeowners owe more than their property is worth. The problem stems from the fast declining real estate values of the last few years. Mortgage rates have dropped too, but millions of borrowers have been unable to take advantage of the lower rates because they have “negative equity” – their mortgages are worth more than the value of the underlying property. A large percentage of those borrowers fell behind on their payments, leading to foreclosures.
As a result of this continuing problem, the government designed a pair of programs, the Home Affordability Modification Program (HAMP) and the Home Affordable Refinance Program (HARP), to aid these borrowers. Yet 62.2 percent of the 300 FreeScore.com survey respondents said they were unaware of the programs. More troubling, 72 percent of survey respondents said they have not heard of either the HAMP or HARP programs.
From the survey:
Q. Are you aware of any new government programs to make home buying more affordable?
| Yes | 37.77 % | |||||
| No | 62.23 % | |||||
Q. Have you heard of either, or both, of these government home lending programs a) Home Affordability Modification Program (HAMP) or b) Home Affordable Refinance Program (HARP)?
| Heard of HAMP | 5.26 % | |||||
| Heard of HARP | 8.98 % | |||||
| Heard of both HAMP and HARP |
13.31 % |
|||||
| Not heard of either program | 72.76 % | |||||
Both HAMP and HARP are designed to give troubled borrowers new ways to take advantage of lower interest rates. Prior to these plans, underwater homeowners, whose mortgages were worth more than their homes, had little recourse but to either pay the higher mortgage rate on the devalued property or ultimately foreclose. The programs help underwater homeowners avoid foreclosure by allowing borrowers to renegotiate the terms of their mortgage, refinance at lower rates, and adjust monthly mortgage payments downward, in line with current market valuations.
Borrowers using HAMP and HARP should note that these modified loans will reflect on one’s credit report that the borrower is “current (on payments), but on the modified amount.” It is important that homeowners and borrowers continuously monitor and understand their credit information and scores from each of the three national credit bureaus: TransUnion, Experian, and Equifax. Consumers with stronger credit standings can often negotiate better rates and terms with new and existing lenders, and can also aid in securing help from the government in terms of HAMP and HARP.
With so many borrowers unaware of these government programs, FreeScore.com is providing free answers about HAMP and HARP, which can be found in the Common Credit Questions Answered section of FreeScore.com
The survey data were collected from Survey Sampling International, using an opt-in panel of 300 respondents.
About FreeScore.com
FreeScore.com, the value leader in online consumer credit services, provides members with affordable, unlimited access to all three credit scores from each of the national credit bureaus: TransUnion, Experian and Equifax. Over one million consumers trust FreeScore.com for their three bureau credit scores and information. For more information, go to FreeScore.com. FreeScore.com is a service of FYI Direct, Inc.