Making Home Affordable Program Launched

Posted by Madison on March 5, 2009

The details for the Homeowner Affordability and Stability Plan were released yesterday. The new title of the program is “Making Home Affordable.”

There are two components for home owners, refinancing and loan modifications. Participation is voluntary and the lender has to choose to participate. Details of both plans are below.

Home Affordable Refinance

Borrowers who haven’t been able to refinance because their home value decreased now have an option to refinance into a 30 or 15 year, fixed rate loan.

Eligibility is as follows:

  • Your loan is is owned or controlled by Fannie Mae or Freddie Mac.
  • You are current on your mortgage payments.
  • You have stable income to support the new mortgage payments.
  • Your first mortgage will not exceed 105% of the current market value of the property.

Want to find out your FICO score before you refinance? Get your Free FICO Scores & Credit Reports.

Home Affordable Modifications

Requirements for the loan modification program are:

  • Your loan must have been obtained on or before January 1, 2009.
  • Have a first mortgage with a balance less than $729,750.
  • Be owner occupied in a one to four unit property.
  • Document income with signed IRS 4506-T, two most recent pay stubs, and most recent tax return.
  • Sign an affidavit of financial hardship.
  • Modify by December 31, 2012. Updated: Extended until December 31, 2013.
  • Have a mortgage payment that is no longer affordable, examples include significant change in income or expenses.
  • Go to counseling if household debt is more than 55% of income.

The loan modification will lower the interest rate to make the payment (principal, interest, taxes, insurance, and home owners association dues) 31% of income. After five years, the rate will adjust 1% each year until it reaches the prevailing market interest rate on the date the modification.

In addition, there may be an incentive payment for borrowers for on time payments. Over five years the total principal reduction is up to $5,000.

Making Home Affordable Program Plan

Complete details, and a tool to find out if you are eligible, are listed at Financial Stability.gov or MakingHomesAffordable.gov:





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Comments to Making Home Affordable Program Launched

  1. I found an online form that calculated by eligibility for this plan. was the most useful thing I’ve found on this:

    http://www.homeaffordplan.com

    Jim

  2. I apply for this program and was told that it was going to cost me seven hundred a month for four months. Is this true or not

    Gerard Davis

  3. hi, my question is about a house the my mom is buying, she did the contract before april 30 but the bank is taking so slow and we still not do the closing, and i wondering if she do the clising days one week after june 30 if is extantion for her to get the 8,000 first home buyer. can you please answer my question becuase i hear for other person they were trying to spread the law but and not sure. thank you a lot.

    jessica

    • Right now there are not any exceptions for going past June 30. However, there are a few congressmen who have proposed making an extension for people in your mom’s shoes. Stay tuned to the news!

      Madison

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