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Making Home Affordable
April 2009 | Making Home Affordable
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Background
April 2009 | Making Home Affordable
Homeowner Affordability & Stability Plan
Making Home Affordable Program
Home Affordable Refinance
Home Affordable Modification
The Administration’s
Plan
Program for Homeowners
Programs Available
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Home Affordable Refinance
• Purpose - Gives borrowers the opportunity to refinance into more affordable loans at today’s lower rates– Only for borrowers with Fannie Mae or Freddie
Mac loans
• Scope - An estimated 4 to 5 million borrowers are eligible
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Refinance Eligibility Criteria
Borrower –
• Owns and occupies a 1-4 unit property
• Is current on the mortgage
• Has sufficient income to support the new modified payment
• Loan is owned or guaranteed by Fannie Mae or Freddie Mac
• Amount owed on the first mortgage is not more than 105% of property’s current market value
• Refinance will improve the long-term affordability or sustainability of the loan
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Home Affordable Modification
• Purpose - Modifies loans of qualifying at-risk borrowers to achieve affordable payments – Encourages participation from all parties
through use of incentives
• Scope - An estimated 3 to 4 million borrowers are eligible
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Modification Eligibility Criteria
• Owner-occupant of 1-4 unit property
• Amount owed on first mortgage is equal to or less than $729,750
• Mortgage was originated on or before January 1, 2009
• Monthly payment on first mortgage is more than 31% of borrower’s gross (pre-tax) monthly income
• Borrower has a mortgage that is not affordable
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Modification Process
• The Servicer…– Determines if borrower meets minimum
eligibility criteria– Obtains borrower income / expense information
• May rely on verbal information for trial period but will need to verify before modification
– Calculates borrower’s debt to income ratio
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Modification Process
• The Servicer…– Calculates new payment at 31% of borrower’s
gross (pre-tax) monthly income – Performs internal test to determine whether it
makes financial sense to the investor to modify the loan• If yes, borrower enters 3-month trial modification• Permanent modification occurs upon success
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Modification Process
• To get to 31% DTI, the servicer must…
– Reduce the interest rate to as low as 2%– If necessary, extend the loan term to 40 years– If necessary, defer a portion of the principal,
interest-free, until the loan is paid off
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www.MakingHomeAffordable.gov
Informative Video for Homeowners Needing Help
Online Self-Assessment Tools for Home Affordable Refinance & Home Affordable Modification
Easy-to-Use Main Navigation for Homeowners to Quickly Find
Information
On the Home Page, consumers can access: Spanish Content Consumer FAQs Helpful Links in Footer 888-995-HOPESample Home Page
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Are Lenders Required to Participate?• If you have a Fannie Mae or Freddie Mac loan, yes.• For other loans, participation is optional. However,
significant financial incentives are being provided to encourage participation by borrowers, lenders and investors.
• To find out if your servicer is participating go to: www.MakingHomeAffordale.gov
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Beware of Rescue Scams
• Beware of any company that promises:– That it’s safe to skip your mortgage payments– That walking away from your house won’t affect
your credit– They will buy your house & sell it back to you
later– A specific result, for a fee
April 2009 | Making Home Affordable
There is never a fee for getting information about the Making Home Affordable program from your servicer or a HUD-
approved housing counselor.
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Additional Resources
• For Immediate Borrower Assistance:– Call 1-888-995-HOPE (4673)
• Find a HUD-Approved Housing Counselor:– Visit www.MakingHomeAffordable.gov
• Find Your Servicer’s Phone Number:– Refer to your monthly mortgage statement, or– Look up on www.MakingHomeAffordable.gov
April 2009 | Making Home Affordable