Obama's Home Affordability Loan Modification Program Part 2

The Obama Plan has a number of provisions to assist homeowners who are responsible, but are exhibiting hardships. We will discuss 2 segments of the plan and how they are broken down...

1.] Making Home Affordable

1.] Home Affordable Refinance Program for Responsible Homeowners
Suffering From Falling Home Prices.

2.] A Comprehensive $75 Billion Home Affordable Modification Program

A.] A Loan Modification Plan to Reach up to 3-4 Million Homeowners
B.] Shared Effort with Lenders to Reduce Mortgage Payments
C.] Incentives to Servicers and Borrowers
D.] Clear and Consistent Guidelines for Loan Modifications
E.] Required Participation by Financial Stability Plan Participants
F.] Modifications of Home Mortgages During Bankruptcy
G.] Strengthen Hope for Homeowners and Other FHA Loan Programs
H.] Support Local Communities and Help Displaced Renters
I.] Support Low Mortgage Rates by Strengthening Confidence in Fannie Freddie

Making Home Affordable will offer assistance to as many as 7-9 million homeowners, making their mortgages more affordable and helping to prevent the destructive impact of foreclosure on families, communities, and the national economy.

The Home Affordable Refinance program will be available to 4-5 million homeowners who have a solid payment history on an existing mortgage owned by Fannie Mae or Freddie Mac. Under normal conditions these borrowers would be unable to refinance because their homes have lost value, pushing their current loan-to-value ratio above 80%. Under the Home Affordable Refinance program, many of them will now be eligible to refinance their loan to take advantage of today's lower mortgage rates or to refinance an adjustable-rate mortgage into a more stable mortgage, such as a 30-year fixed rate loan.

GSE lenders and servicers already have much of the borrower's information on file, so documentation requirements are not likely to be burdensome. In addition, in some cases an appraisal will not be necessary. This flexibility will make the refinance quicker and less costly for both borrowers and lenders. The Home affordable Refinance program ends in June 2010.

The Home Affordable Modification program will help up to 3-4 million at-risk homeowners avoid foreclosure by reducing monthly mortgage payments. Working with the banking and credit union regulators, the FHA, the VA, the USDA, and the Federal Housing's Finance Agency, the Treasury Dept has announced program guidelines that are expected to become standard industry practice in pursuing affordable and sustainable mortgage modifications. This program will work in tandem with an expanded and improved Hope for Homeowners Program.

With the information now available, servicers can begin immediately to modify eligible mortgages under the modification program so that at-risk borrowers can better afford their payments. Detailed guidelines will provide information on the following:

2.] Eligibility and Verification

A.] Loan originated on or before January 1, 2009
B.] First-lien loans on owner-occupied properties with unpaid principal balances up to $729,750.00. Higher limits allowed for owner-occupied properties with 2-4 units.
C.] All borrower must fully document income, including signed IRS 4506-T, two most recent pay stubs, and most recent tax returns, and must sign an affidavit of financial hardship.
D.] Property owner occupancy status will be verified through borrower credit report and other documentation; no investor-owned, vacant, or condemned properties.
E.] Incentives to Lenders and servicers to modify at risk borrowers who have not yet missed payments when the servicer determines that the borrower is at imminent risk of default.
F.] Modifications can start from now until December 31, 2012; loans can be modified only once under the program.

In my next post, I will discuss and detail "Loan Modifications Terms and Procedures", as well as "Transparency and Accountability". These protocols are detailed so that the public can understand how the process works, who is eligible, and what will be required.

Even if the applicant cannot qualify under these guidelines, there are other "Loan Modification" programs available. Each program is unique to the lender and each situation is unique to the borrower. Some include investor-type properties, as well as second homes. Each is decided on a "case by case" basis. Don't consider yourself out of the game. If you are experiencing a hardship...if you are experiencing financial challenges...be proactive. "Empower Yourself". Contact me directly. We can help...