What is the Homeowners Affordability and Stability Plan (HASP)?
The Homeowners Affordability and Stability Plan (HASP) is a comprehensive U.S. program introduced on February 18, 2009. Its primary objective is to help up to 9 million homeowners avoid foreclosure by making their monthly mortgage payments more manageable.
Funding and Financial Structure
Initially, HASP was funded with $75 billion, supplemented by an additional $200 billion for Fannie Mae and Freddie Mac to purchase and refinance mortgages more easily. The primary funding source for this initiative is the Housing and Economic Recovery Act of 2008, under which a majority of the funds are allocated.
The program fundamentally adopts a cost-sharing strategy with incentives aimed at encouraging lenders to reduce homeowners’ monthly payments to 31% of their gross monthly income. Specifically, the plan includes:
- Lenders reducing total monthly mortgage payments (principal, interest, taxes, and insurance) to no more than 38% of the borrower’s income
- Government sharing the cost to push this further down to 31%
- Potentially forgiving or deferring parts of the borrower’s mortgage balance
Practical Example
To give you a clearer idea of how HASP works, consider John. John’s current mortgage payment is $2,000, representing 50% of his monthly income. Under the new plan, lenders are encouraged to lower his mortgage payment to $1,240, representing 31% of his income. This reduction can be achieved by lowering the interest rate or the principal amount, effectively helping John avoid foreclosure. Both the lender and the government share the cost of this reduction.
Frequently Asked Questions (FAQ)
1. Who qualifies for HASP?
To qualify, homeowners must be delinquent in their mortgage payments or at risk of imminent default, live in the property as their primary residence, and meet specific income criteria.
2. What steps should I take to apply for assistance under HASP?
Homeowners should contact their mortgage lender or servicer to discuss eligibility and the required documentation for the program. Additional guidance can also be sought from housing counseling agencies approved by the Department of Housing and Urban Development (HUD).
3. How will HASP help me reduce my mortgage payment?
The program assists by incentivizing lenders to lower interest rates and/or reduce the principal balance, ensuring your mortgage payment does not exceed 31% of your gross monthly income.
4. What role do Fannie Mae and Freddie Mac play in HASP?
Fannie Mae and Freddie Mac provide the necessary financial support to refinance troubled home loans, easing the process for struggling homeowners to secure lower, more sustainable monthly mortgage payments.
Related Terms: Foreclosure, Mortgage Assistance, Mortgage Refinancing, Housing Market, Economic Recovery
