You’ve made it this far through the recession, but the economy is not rebounding fast enough for you to completely get back on track.  Many people have already cut every coupon, switched to generic, and cut eating out to get their budget under control.  Despite your best efforts, you may still be crunched for income to cover your basic bills like your mortgage.  To help struggling consumers, Congress passed the Home Affordable Refinance Program (HARP) and the Home Affordable Modification Program (HAMP).

The HARP program applies to consumers who already have loans through Freddie Mac or Fannie Mae.  The stated purpose of the program is to help people who would not ordinarily qualify for refinancing to obtain refinancing at an affordable rate.  To qualify you must be current on your payments and be able to demonstrate a reasonable ability to repay the loan.  Many consumers will be excluded from this program because of these requirements.  However, you may still be eligible for the HAMP program.

The HAMP program is slightly different.  You can still potentially qualify for the program even if your loan is not through Freddie Mac or Fannie Mae.  The goal of this program is modify mortgage payments so they do not exceed 31% of your monthly income. To initially qualify, your mortgage payment must be greater than 31% of your total pre-tax income. This program can only be used to modify a first lien, not a junior lien.  Depending on your financial situation, you may not be required to pay many of the expenses associated with modification programs.  You do not have to be current on your payments to participate in this program.  However, many people will not qualify because of the 31% rule.  Keep in mind that the comparison is to pre-tax income—which is before you pay all of your other expenses, including utilities and credit card bills.

If your mortgage is your main debt issue and you qualify for either of these programs, these are options you should consider to get your finances under control.  However, if your debt issues extend beyond your mortgage obligation, these options may not be enough to help you get through the end of the recession.  The HARP and HAMP programs are available until June of 2010.  Before you commit or apply, take the extra time to get a complete assessment of your financial situation with a qualified bankruptcy attorney.    They can review all of your debt obligations to see what other options are available to resolve all of your debt issues.  Their advice is not limited to how to avoid foreclosure of your home.  They can also provide you information on how to get other unsecured debts under control so that you can afford your original or modified mortgage.