Making Homes Affordable
CalSTRS participates in the federal government’s Making Homes Affordable programs which are designed to help struggling homeowners prevent avoidable foreclosures. Freddie Mac serves as the U.S. Department of the Treasury’s compliance agent for MHA, and Fannie Mae is the programs’ administrator. In this section, we touch upon the two most significant pieces of MHA, both of which are scheduled to expire at the end of 2016.
Frequently Asked Question
Are there other state agencies offering mortgage programs geared toward teachers?
The California Housing Finance Agency (CalHFA) offers a variety of home purchase programs, one of which is the Extra Credit Teacher Home Purchase Program.
CalSTRS does not specifically endorse mortgage programs offered by other parties; however, information about CalHFA programs can be found at http://www.calhfa.ca.gov/
The first MHA program is the Home Affordable Modification Program. HAMP assists eligible borrowers lower their monthly payments in order to make them more affordable and sustainable through a uniform modification process.
HAMP is targeted to borrowers with a financial hardship that are either delinquent or in danger of falling behind on their mortgage payments, and who obtained their mortgage on or before January 1, 2009. Borrowers seeking a HAMP modification must be employed and have sufficient documented income to support a modified payment.
As of December 31, 2015, 72 first lien mortgages originated through the Home Loan Program have received permanent HAMP modifications. Borrowers approved for HAMP modifications are eligible to have the second lien modified under HAMP’s “2MP” component once it exits the deferral period and becomes fully amortizing. There have been a total of 26 2MP modifications completed as of the end of 2015 and each mirrors the terms of the associated first lien HAMP modification.
Another major program included in MHA is the Home Affordable Refinance Program. HARP is for borrowers who are current on their mortgages with a good payment history during the past twelve months.
A significant qualifier for HARP is that the mortgage must have been purchased by Fannie Mae or Freddie Mac on or before May 31, 2009. Whenever a HARP refinance involves a second lien, the second lien holder must agree to resubordinate their position to a new first lien. Doing so entails CalSTRS granting an exception to a term established in the second mortgage note which requires the second mortgage be paid in full immediately, should the first lien be refinanced. Refinancing information, including HARP refinancing, is addressed in the Home Loan Program’s first Frequently Asked Question on the CalSTRS website. Most HARP eligible borrowers have already refinanced during this prolonged period of low mortgage interest rates.
Since the launch of HARP in 2009, a total of 625 first lien mortgages originated through the CalSTRS home loan program refinanced via HARP.