The making home affordable program is part of the Obama plan to help up to 9 million troubled homeowners with either refinancing their home or with a mortgage modification program. For more information on the plan, please visit the following government website at makinghomeaffordable.gov.

Refinance
Homeowners who were not eligible to take advantage of low interest rates because they did not have enough equity in their home can now do so under the new Home Affordable Refinance Program for loans that are owned by Fannie Mae and Freddie Mac or which are securitized by them. The objective is to make the loan payment affordable for you.  Refinancing lowers your interest rate, but not your principal balance.

Eligibility Requirements

• Owner occupied one to four units.  No investor owned properties or vacant properties are eligible.
• Your loan is owned or securitized by Fannie Mae or Freddie Mac.
• You are current on your mortgage payments.
• The amount you owe on your current first mortgage is approximately the same or slightly under the current market value of your home. Loans that include a first mortgage that do not exceed 105% of the current market value of the home qualify.
• Proof of income to make the new mortgage payment.
• By refinancing, you are improving your long term affordability of your home and stabilizing your mortgage so that you will not default and go into foreclosure.

To take advantage of this program, contact your lender and ask for the Home Affordable Refinance Program. You will need to provide your lender with a copy of your bank statement, paycheck stub, income tax return and a list of your debts.  The lender is most interested in making sure that you have sufficient income to make the new mortgage payment and that your mortgage does not exceed 105% of the current market value of your house. The program is available through June 10, 2010.

Modification
The Home Affordable Modification Program is for homeowners who are struggling to make the payments on their current mortgage and who are already delinquent on their mortgage payments or about to be. It is designed to help approximately 3 to 4 million homeowners keep their homes and avoid foreclosure by modifying the terms of the existing loans making the payments affordable.

Eligibility

• Owner-occupied one to four unit property only. No investor owned property or vacant property is eligible.
• Your unpaid first mortgage must be equal to or less than $729,750 (there is a higher limit for two to four unit properties, ask your loan servicer for more information).
• Your loan must have originated on or before January 1, 2009, and must be a first lien.  Second lien mortgages are not eligible.
• Your mortgage payment including insurance, taxes and any homeowner association dues must be more than 31% of your gross (pre-tax) monthly income.
• You cannot afford to make your current mortgage payment because it is not affordable for you.
• You can only modify your loan once under the program.

To take advantage of the Home Affordable Modification Program, contact your lender. You will need to provide them with a copy of your most recent paycheck stub, your bank statement, a list of your debts and assets, your recent income tax return, W-2 or 1099’s and a hardship letter explaining why you cannot make your current loan payment.  However, you must have enough income to show that you can make the new modified payment.

The interest rate will be lowered by no more than 2 points, then the term may be extended up to 40 years term, and debt forgiveness or refinance are also other options available.

Be sure to visit our making home affordable category for more information.