In the wake of the financial crisis, government programs, including the Home Affordable Modification Program and the Home Affordable Refinance Program were created to help struggling borrowers lower their monthly payments and stay in their homes. By reducing the number of foreclosures, the housing market would likely be able to recover more quickly, benefiting all involved.
The Making Home Affordable Program (MHA)—the overarching program to help homeowners—was originally created in 2009, with the intention of helping borrowers for a few years. However, with so many still struggling, the Obama administration announced in a press release this week that MHA would be extended until December 31, 2015.
"The housing market is gaining steam, but many homeowners are still struggling," Treasury Secretary Jacob Lew said in the release. "Helping responsible homeowners avoid foreclosure is part of our wide-ranging efforts to strengthen the middle class, and Making Home Affordable offers homeowners some of the deepest and most dependable assistance available to prevent foreclosure."
The MHA has evolved since it was first created by expanding rules to allow more homeowners to qualify, but the Treasury explained that it has not reached the number of homeowners that was originally expected.
While this extension of the program will allow more homeowners to stay in their homes, it does show the still recovering economy in which many borrowers are struggling. For banks, this uncertainty means providing extra attention to loan applicants. With credit and risk management software, financial institutions and lenders can make accurate decisions to seek out qualified borrowers and help bring down foreclosure rates and improve the economy.