What is Homeowner affordability and stability plan HASP ?
Definition of Homeowner affordability and stability plan HASP
Homeowner affordability and stability plan HASP is a program to avoid foreclosure.
Foreclosure is a process in which possession of mortgaged property is taken if the mortgagor fails to pay their mortgage payments.
Brief Explanation of Homeowner affordability and stability plan HASP
The Homeowner affordability and stability plan is a program launched in 2009 during the reign of President Barack Obama in United States.
It helps two types of defaulters:
- who are unable to refinance because their homes have decreased in value
- Those who do not have sufficient income to pay their mortgages.
Its aim is to offer modification in loan terms that would reduce monthly principal and interest payments on the mortgages of the default borrowers.
Eligibility: Borrower is only eligible if the borrower has not been late in making his payments in last six or twelve months.
Other main basics includes
- The HASP assistance is only for borrowers whose mortgage is guaranteed by Freddie Mac (Federal Home Loan Mortgage Corporation (FHLMC) or Fannie Mae Federal National Mortgage Association (FNMA).
- The mortgage was sold before May 2009 to Fannie Mae or Freddie Mac.
- The refinancing scheme must improve financial ability of borrower through reduced interest rates and reduced interest payments.
- This plan helps to reduce the mortgage payments to as low as 31% of the monthly income.
- The intention to introduce HASP was to prevent housing values in the state from deteriorating by preventing foreclosure.
- It was also designed to provide benefit to several million families residing in United States.
- The investor must remain the same during the new refinancing procedure.
- The borrower must have the ability to repay his debts.
- The program worth around $ 75 Billion to help around 9 million borrowers from foreclosure.
- Later on $ 200 billion was injected by additional funding by Fannie Mae and Freddie Mac hence total value of program increased to $ 275 billion.