What Is “MAKING HOME AFFORDABLE”?

Making Home Affordable is a special initiative created under President Barack Obama to help struggling homeowners refinance or modify their mortgages so they’re more affordable and sustainable.  Up to 9 million Americans could take advantage of this program and low interest rates to secure a more stable financial future.   
 

How Can MAKING HOME AFFORDABLE Help Me?

President Obama’s Making Home Affordable program has two features: Home Affordable Refinance, which will help people who are current on their mortgage and want to refinance but can’t because their home is now worth less than they owe; and Home Affordable Modifications, which will help people who are either already behind on their mortgage, or are at risk of falling behind because their mortgage has become unaffordable.   
 

Tell Me About The HOME AFFORDABLE REFINANCE Feature.

The Home Affordable Refinance program will help people who want to take advantage of lower interest rates, but can’t refinance their mortgage because their house is worth less than they owe.  The Refinance program will also help borrowers who have an Interest Only (IO) or Adjustable Rate Mortgage (ARM) with a low introductory rate that has already reset, or will soon reset, to a much higher payment. By converting their variable rate mortgage to a 15- or 30-year Fixed Rate Mortgage, they will lock in a low interest rate, avoid future payment increases, and have peace of mind knowing their monthly principal and interest payment will never change.      
 

• You must be current on your mortgage, and over the past 12
•     months, you can only have been 30 days late one time; or, if
•     you have owned your home for less than 12 months, you must
•     never have missed a payment.  If you are delinquent now, or
•     have been delinquent more than one time, the
•     Home Affordable Modifications Program may be right for you. 

• You must be the owner-occupant of the home or 1 to 4 unit
•     property that you want to refinance.
• Your property must be worth about the same or only slightly
•     less than what you owe on your mortgage – specifically, your
•     existing mortgage cannot exceed 125% of the current market
•     value of your home.  As an example, if your home has lost
•     value and is now worth $200,000 but you still owe $250,000
•     on your mortgage, you may qualify because your mortgage
•     is not more than 125% of the market value of your home.

• The loan on your home must be owned or securitized by
•     Fannie Mae or Freddie Mac.  If you don’t know who holds
•     your loan, click here or call 800-7FANNIE (8am to 8pm EST)
•     or 800-FREDDIE (8am to 8pm EST).
• You can participate in the program if you also have a second
•     mortgage or equity line of credit, but you can’t consolidate
•     these loans into the new mortgage – you can only refinance
•     your primary mortgage.  Your second mortgage lender has to
•     agree to remain in second position for repayment and that will
•     take some negotiating on your part. 
• Your payment may or may not go down.  If you currently have
•     a high interest rate, you should see an immediate reduction in
•     your mortgage payment when you refinance into a lower rate
•     loan.  However, if you are already paying a low introductory rate,
•     your payments may actually go up when you refinance.  The
•     benefit of refinancing is in locking in a lower interest. 

• To get started, call your mortgage servicer, the people who
•     take your mortgage payment, and ask about Home Affordable
•     Refinance.  Their number is on your monthly mortgage bill or
•     coupon book or you can click here for a list of servicers and
•     contact information.  If your loan is with Fannie Mae, you can
•     call any Fannie Mae approved lender to refinance.  Nearly all
•     major banks and mortgage companies are approved to work
•     with them. 

Given that many people are looking for financial relief right

-  Evidence of monthly gross income of all borrowers,

   documentation of any payments received from other

   sources, and documentation of assets

-  Your monthly mortgage statement

-  Information on any second mortgage or equity line

   of credit

-  Credit card account balances and minimum monthly

   payments due

-  Utility payments and other monthly household bills

-  Monthly payment information on other debt obligations,

   such as student loans, car loans, or personal loans

-  Other legally mandated payments such as child support

-  A copy of your most recent income tax returns

• The Home Affordable Refinance program expires on June 10,
•      2010.

What can you do if you are not current or have been late more than once in the past 12 months?  What if you are already facing default and foreclosure?  Is there any help for you?  Yes!  Read on. 
 

Tell Me About The HOME AFFORDABLE MODIFICATION Feature.

The Home Affordable Modification program will help people who are struggling to stay current on their mortgage or who are already behind.  You don’t have to have a Fannie Mae or Freddie Mac loan to qualify – the Treasury Department is providing incentives to encourage servicers to participate – and more are signing up every day.  By enrolling, these servicers agree to review every potentially eligible borrower who calls or writes asking to be considered.  By stimulating servicer participation, the administration hopes to help as many as 4 million homeowners avoid foreclosure. 

What Should I Know About HOME AFFORDABLE MODIFICATION?

• You must be the owner-occupant of the home or 1 to 4 unit
•     property that secures the loan you want to modify.  You
•     cannot modify the loan on a vacation home or a house you
•     rent to others.  
• The balance remaining on your loan must be equal to or less
•     than $729,750 for a one unit property – the balance can be
•     higher for a 2 to 4 unit property.
• Your loan must have been originated on or before January 1,
•     2009.
• Your mortgage payment must be more than 31% of your
•     gross (pre-tax) income; or be unaffordable due to other
•     expenses, hardship, or a change in income.
• You don’t have to be delinquent to qualify for a Home
•     Affordable Modification.  You may qualify if you are current
•     but at risk of soon defaulting, either because your loan has
•     reset and you cannot afford the higher payment, you’ve lost
•     a source of income, or have experienced some other form
•     of hardship that is making your loan payment too great a
•     financial burden to bear.
• You are eligible for a Home Affordable Modification if you
•     have a second mortgage, but only the first mortgage can be
•     modified.
• Lender participation is voluntary; however, the government
•     expects most major loan companies will sign up because of
•     the incentives for participation.  Names and contact informa-
•     tion of participating servicers will be posted at
•     www.makinghomeaffordable.gov, but you can determine quickly
•     if your servicer is on the list by calling the number on your
•     mortgage payment stub and asking them directly.  If your
•     servicer has chosen not to participate, ask them about
•     other options that may be available to help you.
• If you are interested in a Home Affordable Modification, the
•     first thing your lender will do is determine if your loan meets the
•     minimum eligibility criteria.  You can determine basic eligibility
•     yourself by clicking here. 
• When you meet with your lender, have good documentation
•     with you, including:

-  Evidence of income and assets, such as pay stubs and

   tax returns 

-  A record of expenses, such as utility payments, credit

   card balances and minimum monthly payments

-  Other legally mandated payments such as child support

-  Your monthly mortgage statement

-  All debt obligations, such as student loans, car loans,

   personal loans, and second mortgages 

-  Have some form of documentation to substantiate your

   claim of hardship, such as proof of catastrophic medical

   expense, job loss, etc.

-  Prepare a letter describing why your mortgage is

   unaffordable.  Explain why your income has gone down

   or your expenses have gone up

• If you qualify, and your lender agrees that it is in everybody’s
•      best interest to modify your loan, the lender will give you a new,
•      lower rate and a 3-month trial period to demonstrate that you
•      can handle the payments.
  •           -  If you are unable to stay current during your trial period,
  •             you are not eligible for the Home Affordable Modifications
  •             program, but there may be other options available to help
  •             you avoid foreclosure. 
  •           -  If you successfully complete the trial period, your lender
  •             will modify your loan to the new, lower rate for 5 years. 
  •             At the end of 5 years your mortgage will reset again, but
  •             at a rate no higher than the market rate on the day your
  •             loan was first modified.  Your loan will stay at this low, 
  •             fixed rate for the remaining life of the loan.
• If you qualify for a Home Affordable Mortgage, your new loan
•     payment will escrow funds to pay property taxes and insurance,
•     even if you did not escrow these funds in your original
•     mortgage. 
• Your lender is more likely to reduce your interest rate to make
•     your payment affordable than to reduce your principle, even if
•     you owe more than the house is worth.
• You will not be required to pay a modification fee or past due
•     late fees.  You will be required to pay any insurance, taxes, or
•     interest payments your lender may have had to pay on your
•     behalf.  This amount can be paid up front or added to your
•     mortgage.
• For every month you make your payment on time, the
•     Treasury will pay an incentive bonus against your principle
•     balance.  Over the 5-year life of your modified loan, this
•     could add up to as much as $5,000.
• FHA and VA loans are being modified under other programs. 
•     If you have a FHA or VA loan, call your lender or go to
•     www.hud.gov/foreclosure/index.cfm to learn more about their
•     foreclosure avoidance programs.
• The Home Affordable Modification Program expires on
•     December 31, 2012.
•  

CAUTION:  If you are already one or more payments behind on your mortgage, or if your home is already scheduled for foreclosure, it is imperative that you speak with your lender immediately! You can find contact information for your lender on your mortgage payment stub or by clicking here.

Find out if your lender is participating in the Making Home Affordable initiative.  If not, educate yourself on other alternatives to foreclosure.  It is critical that you act quickly if you are to save your home or protect your credit record.  Many lenders have committed to delay foreclosure on any mortgage that might be eligible for a Home Affordable Modification.  Call your lender today! 

Detailed information on the Home Affordable Mortgage Programs, including basic eligibility criteria and answers to Frequently Asked Questions, can be found at www.makinghomeaffordable.gov.

If you would like to speak with a HUD-approved counselor about the Making Home Affordable Programs, or VA or FHA foreclosure avoidance options, call 888-995-HOPE (4673).  This counseling is free. 

Source: makinghomeaffordable.gov