• Home
• Personal Finance
• Economy
• New School
• Asked & Answered

• ABOUT
• FAQ
• RESOURCES
• ADVERTISE
• CONTACT

President’s Mortgage Rescue Plan

I have received several questions regarding President Obama’s mortgage rescue plan called Making Home Affordable Program. There are two aspects to the Program: a) refinancing and b) loan mortgage modification.  Each aspect addresses different borrower situations.  The website can help you determine if you are eligible and don’t fall prey to the many foreclosure rescue scams that are out there - help is free through a HUD-approved housing counselor. 

Refinance

The program allows people who may have not been able to take advantage of low mortgage rates (Avg. 4.91%) because the value of their home has decreased.  Refinancing a mortgage now may significantly lower monthly mortgage payments and if you have an adjustable rate mortgage this program gives you an opportunity to refinance to a fixed rate mortgage.  The program does have the following eligibility guidelines:

1) Must be an owner of one- to four-unit home.
 
2) Current mortgage must be guaranteed or owned by Fannie Mae or Freddie Mac.  Contact your loan servicer (the company you send your mortgage payment to) to determine whether Fannie or Freddie own or guarantee your mortgage or call Fannie Mae at 1-800-7fannie, Freddie Mac at 1-800Freddie. 

3) Must be current on mortgage payments: meaning you haven’t been more than 30-days late on your mortgage payment in the last 12 months.

4) Value of your home must be same or less than the outstanding mortgage balance.

Unfortunately, this last requirement may eliminate a lot of people because home values have dropped in many areas of the country.  Don’t let this last requirement deter you from inquiring about your eligibility.

Loan Modification

This program targets those homeowners that are “at risk” of defaulting on their mortgage loan - people who are struggling to make their monthly mortgage payment.  The goal of the program is to reduce the monthly mortgage payment to an acceptable level based on homeowner’s income and to keep people in their homes.  The following are a few of the program’s eligibility guidelines:

1) Your home must be your primary residence.

2) Your suffering from some hardship: significant increase in monthly payment, reduction of income since you obtained current loan or suffered a hardship that has significantly increased your expenses such as medical bills.

3) You obtained current mortgage before January 1, 2009.

4) Your payment on your first mortgage (including principal, interest, taxes, insurance and homeowner’s association dues, if applicable) must be more than 31% of your current gross income.

The loan modifications apply only to first mortgages.  A second mortgage does not automatically disqualify a person and being late with mortgage payments is not a requirement.

If you meet these guidelines then gather the following information before you contact mortgage loan servicer:

CHECKLIST

  * Information about the monthly gross (before tax) income of your household, including recent pay stubs if you receive them or documentation of income you receive from other sources.
  * Your most recent income tax return.
  * Information about your savings and other assets
  * Information about your first mortgage, such as your monthly mortgage statement.
  * Information about any second mortgage or home equity line of credit on the house.
  * Account balances and minimum monthly payments due on all of your credit cards.
  * Account balances and monthly payments on all your other debts such as student loans and car loans.
  * A letter describing any circumstances that caused your income to be reduced or expenses to be increased (job loss, divorce, illness, etc.) if applicable.

After you have gathered this information call your loan servicer and ask to be considered for a Home Affordable Modification.  The phone number for your services should be on your monthly mortgage statement or coupon book. 

For more information about these program please go the Making Home Affordable website.

Good luck.