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Federal Program Provides Relief for Homeowners

Barb and her family on their porch

Several years back, Barb Carranza did what many homeowners at the time did. She refinanced her home mortgage to pay off other debt. What she didn’t anticipate at the time is going through a divorce.

“While the relationship ceased to exist, the debt did not, and all of the financial responsibility had fallen to me,” said Barb.

Yet she found a way to stay on top of payments until the next surprise happened. Due to a clerical error in calculating how much money was supposed to be pulled into escrow each month, Barb received a letter from her mortgage company informing her that her payment was going up by $400.

“I don’t know anybody that has an extra $400 a month to spare,” said Barb. “By that point, I was paying almost 70 percent of my income for the mortgage. I knew I was in serious trouble.”

So Barb reached out. After contacting Twin Cities Habitat for Humanity, she met with a mortgage foreclosure counselor who reviewed her finances and determined she was eligible for Making Home Affordable’s loan modification program.

Under the program, mortgage payments are reduced to no more than 31 percent of the homeowner’s income, helping those who are either behind or at eminent risk of default, and providing incentives for the borrower to make on-time payments.

In addition to utilizing foreclosure prevention services, Barb met with Habitat’s financial counselor to set a manageable monthly household budget to help ensure that she stays on top of her mortgage payments.

“I feel like I have a whole new beginning and everything is manageable now,” said Barb.

Contributed by Twin Cities Habitat for Humanity.