Federal Programs to Help Homeowners Avoid Foreclosure
Wednesday, February 03, 2010
In February 2009, the Obama Administration announced “Making Home Affordable”, an initiative designed to help homeowners avoid foreclosure. Making Home Affordable includes the following three programs: Home Affordable Refinance Home Affordable Modification Foreclosure Alternatives
Home Affordable Refinance
Borrowers who are current with their mortgage but feel they cannot refinance due to declining home values may consider Home Affordable Refinance. Under this program, borrowers may refinance 30 or 15 year, fixed-rate loans.
Eligibility criteria are:
1) The Property must be Owner occupied
2) The Property must be a one -to- four-unit home
3) The existing mortgage must be owned or backed by Fannie Mae or Freddie Mac
4) The existing mortgage must have a loan-to-value (LTV) ratio above 80% but not more than 105%
5) The borrower must be current with their existing mortgage payments
6) The borrower must have enough income to support the new mortgage payments
The website for Making Home Affordable is: http://www.MakingHomeAffordable.gov Go there for more information and to use the easy-to-use, online tools to assess whether or not you meet their eligibility criteria.
Home Affordable Modification
Homeowners struggling to stay current with mortgage payments because of a change in income or other financial hardship, may seek a loan modification via Home Affordable Modification. Home Affordable Modification is a voluntary program with participation from major mortgage servicers, including, but not limited to, Chase Financial, GMAC Mortgage, Countrywide, and Wells Fargo.
Eligibility criteria are:
1) The Property must be Owner occupied
2) The Property must be a one -to- four-unit home
3) The existing mortgage must have an existing principal balance that is equal to or less that $729,750 for one-unit properties
4) The existing mortgage must have been originated on or before January 1, 2009
5) The existing mortgage payments must exceed 31% of the borrower’s gross monthly income
6) The borrower must be at risk of imminent default, or in default
Again, the website for Home Affordable Modification is: http://www.MakingHomeAffordable.gov If deemed eligible, qualified borrowers are put on a three-month trial period with a modified interest rate and mortgage payment. If the borrower is successful in making payments, the participating mortgage servicer executes an agreement that lowers the interest rate to a fixed rate for five years with caps that will allow the rate to stay at a low rate for the remaining life of the loan.
Foreclosure Alternatives
For borrowers who meet the eligibility criteria for Home Affordable Modification but do not qualify for a modification, Foreclosure Alternatives may be considered. Under this program, borrowers and mortgage servicers are provided incentives, and documentation is standardized, to help facilitate short sales.
Incentives are:
$1,000 for servicers for successful short sales
$1,500 for borrowers to help with relocation expenses
Up to $1,000 toward the cost to pay off junior lien holders to release liens
Other features of this program are:
Depending on market conditions, 90 days up to one year to market and sell the property
No foreclosure may occur during the marketing period specified in the short sale agreement.
Mortgage servicers may not charge fees to borrowers for participating in Foreclosure Alternatives
For more information, go to http://www.treas.gov
- Scott Askew
Posted in: Intown Atlanta Real Estate News
