In March, the Department of Treasury announced the Making Homes Affordable initiative, made up of two components—the Home Affordable Refinance Program (HARP) and the Home Affordable Modification Program (HAMP).

The program was created to offer assistance to as many as 7 to 9 million homeowners making a good-faith effort to make their mortgage payments, while attempting to prevent the destructive impact of the housing crisis on families and communities. It will not provide money to speculators, and it will target support to the working homeowners who have made every possible effort to stay current on their mortgage payments.

The Treasury Department recently announced updates to its Making Home Affordable program to include a second lien program and the use of short sales and deeds-in-lieu of foreclosure.

The Home Affordable Refinance Program (HARP)

HARP provides an option for homeowners, with existing Fannie Mae loans, who have stayed current on their mortgage but are unable to refinance to a lower rate because they owe more on their mortgage than their home is currently worth. The current guidelines allow for refinances up to 125 percent of appraised value.

The expectation is that refinancing a Fannie Mae loan will put responsible borrowers in a better position by reducing their monthly principal and interest payments or moving them from a more risky loan structure (such as interest-only or short-term ARM) to a more stable product.

The Home Affordable Modification Program (HAMP)

HAMP creates a defined loan modification process to help borrowers who are delinquent in making their monthly mortgage payments, in the foreclosure process, or current on their payments but have recently experienced hardship and are about to miss a payment—have their loans modified to a more affordable monthly payment targeted at 31 percent of their monthly gross income.

All servicers must participate in the program, which expires on December 31, 2012, for all eligible Fannie Mae portfolio mortgages and MBS pool mortgages.

For detailed information see a reputable loan officer or institution, or go to these websites: