WHAT IS Homeowner Affordability And Stability Plan or HASP
The Homeowner Affordability and Stability Plan or HASP is a program that rolled out in 2009 in an attempt to stabilize the U.S. economy. The Homeowner Affordability and Stability Plan has three parts: refinancing options for stable homeowners, financial aid for seriously delinquent homeowners and support for Fannie Mae and Freddie Mac. The HASP was expected to benefit several million American families
BREAKING DOWN Homeowner Affordability And Stability Plan or HASP
The HASP is a program that intended to prevent the housing values in entire neighborhoods from deteriorating by preventing foreclosures. The plan was specifically aimed at helping homeowners with mortgages that exceeded the value of their homes. The provisions can offer as much as $6,000 of relief against the decline in home value for many taxpayers.
The Homeowner Affordability and Stability Plan and the Great Recession
The HASP is one of many steps taken by the U.S. government to counteract or limit the effect of a global economic downturn that began in December of 2007. During the Great Recession, millions of people lost their jobs and homes when the housing market started to plummet. Often referred to as the bursting of the housing bubble, the combination of rising home prices, loose lending practices and an increase in subprime mortgages created an economically unsustainable situation. During the late 1990’s and the early 2000’s the housing bubble continued to grow unabated.
The bubble broke in 2007 when numerous foreclosures and defaults crashed the housing market. This greatly depreciated the value of deliberately obscure financial securities that were directly tied to subprime mortgages and mortgage backed securities. This caused a ripple effect throughout the entire global financial system, as banks in the U.S. and around the world began to fail or approach the point of failure. The U.S. federal government intervened to mitigate the damage.
The subprime mortgage collapse led to economic stagnation and to many people losing their homes. Americans faced financial disaster as the value of their homes dropped well below the amount they had borrowed and subprime interest rates spiked. Monthly mortgage payments almost doubled in some parts of the country. In most cases, borrowers were actually better off defaulting on their mortgage loans rather than paying more for a home that had dropped precipitously in value.
Other Federal Actions Taken During the Housing Crisis
Along with 2009’s Homeowner Affordability and Stability Plan, the federal government took several steps to try and secure the U.S. housing market. Another one of these measures was the Foreclosure Prevention Act of 2008, a housing act designed to help families keep homes that were facing foreclosure and to stabilize the overall housing market.