Important info about Obama’s Making Home Affordable Plan 

• Making Home Affordable Plan only involves about 40% of loans (when you read the details for the plan - not all can participate despite what the Obama administration wants you to believe).
• FinancialStability.gov  – read about the Making Home Affordable Plan on the official website to find out if you are eligible and to see the details for the plan
  • Making Home Affordable – Borrower Q&As excerpt for Home Affordable Refinance - http://makinghomeaffordable.gov/docs/borrower_qa.pdf
    • “You may be eligible if you are the owner occupant of a one to four unit home”
    • “Eligible loans will include those where the first mortgage will not exceed 105% of the current market value of the property.  For example, if your property is worth $200,000 but you owe $210,000 or less you may qualify.  The current value of your property will be determined after you apply to refinance.” 
    • “Will refinancing reduce the amount that I owe on my loan?  No.  The objective of the Home Affordable Refinance is to help borrowers get into safer, more affordable fixed rate loans.  Refinancing will not reduce the principal amount you owe to the first mortgage holder or any other debt you owe.  However, refinancing should save you money by reducing the amount of interest that you repay over the life of the loan.”
  • Making Home Affordable – Borrower Q&As excerpt for Home Affordable Modifications - http://makinghomeaffordable.gov/docs/borrower_qa.pdf
    • “To apply for a Home Affordable Modification, you must:  be an owner-occupant in a one to four unit property, and have an unpaid principal balance that is equal to or less than $729,750 (for one unit properties and higher for two to four unit properties (consult your serviceer)).”  Our law firms do not have this restriction for the loan modifications they handle.
    • “How do I know if I qualify for a Home Affordable Modification?  To apply for a Home Affordable Modification, you must:”
      • “be an owner-occupant in a one to four unit property, and have”
      • “an unpaid principal balance that is equal to or less than $729,750 (for one unit properties and higher for two to four unit properties (consult your servicer),”
      • “a loan that was originated before January 1, 2009,”
      • “a mortgage payment (including taxes, insurance, and home owners association dues) that is more than 31% of your gross (pre-tax) monthly income, and”
      • “have a mortgage payment that is no longer affordable, perhaps because of a significant change in income or expenses.”
      • “If you answered YES to all of these questions, you are eligible for a Home Affordable Modification.  Only your servicer will be able to tell you if you qualify.”
    • “I have a second mortgage.  Am I still eligible?  Yes, but only the first mortgage is eligible for a modification.”
    • “How do I know if my servicer is participating?  Are all servicers required to participate?  Servicer participation in the program is voluntary”
    • “What will my servicer do to determine if I qualify?”
      • “Your servicer will:”
        • “Determine that your loan meets the minimum eligibility criteria (owner occupied, originated before January 1, 2009, UPB equal to or less than $729,750).  If yes:”
        • “Obtain sufficient income information to determine if your monthly mortgage payment is more than 31% (approximately 1/3) of your gross or pre-tax monthly income.  (Your servicer may initially accept verbal information about your income, but eventually you will need to provide proof of income in the form of tax returns and pay stubs).  If yes””
        • “Add past due charges (interest, taxes, insurance and costs that your lender paid to other parties on your behalf – but not late fees, those must be waived) to the loan balance.”
        • “Determine how much of an interest rate reduction will be required to get your mortgage payment down to a point where it is about 31% of your gross monthly income.”
        • “Apply a test to determine if the cost of the modification (including the government’s incentive payments) is less costly for the investor than a foreclosure.  If yes:”
        • “Put you on a trial modification for three months at the new interest rate and payment.”
        • “If you successfully make the payments and are current at the end of the trial period, your servicer will execute a permanent modification agreement that will lower your interest rate to a fixed rate for five years.”
        • “The modification payment will also include a monthly amount to be set aside (escrowed) to pay taxes and insurance when they become due.  This escrow is required even if your prior loan was not escrowed.”
    • “What happens after five years?”
      • “If the modified interest rate is below the market rate, the modified rate will be fixed for a minimum of five years as specified in your modification agreement.  Beginning in year six, the rate may increase no more than one percentage point per year until it reaches the cap rate indicated in your modification agreement.  The cap is equal to the prevailing market interest rate on the date the modification is finalized as published by Freddie Mac based on a survey of its customers.  This cap means that your rate can never be higher than the market rate on the day your loan was modified.  If the modified rate is at or above the prevailing market rate, the modified rate will be fixed for the life of the loan.”
    • “Could I end up with a balloon payment?”
      • “Yes.  If your servicer determines that a principal forbearance is required to get your monthly payment to an affordable level, the amount of the forbearance.  Say for example this was $20,000, would be subtracted from the amount used to calculate your monthly mortgage payment, but you would still owe the money.  You would have a $20,000 balloon payment that had no interest and was not due until you paid off your loan, refinanced or sold your house.”
    • “I heard the government was providing a financial incentive to borrowers.  Is that true?”
      • “Yes.  Borrowers who make timely payments on their modified loans will receive success incentives.  For every month you make a payment on time, Treasury will pay an incentive that reduces the principal balance on your loan.  Over five years the total principal reduction could add up to $5,000.  This contribution by the Treasury will help you build equity faster.”
    • “I do not live in the house that secures the mortgage I’d like to modify.  Is this mortgage eligible for a Home Affordable Modification?”
      • “No.  For example, if you own a house that you use as a vacation home or that you rent out to tenants, the mortgage on that house is not eligible.  If you used to live in the home but you moved out, the mortgage is not eligible.  Only the mortgage on your primary residence is eligible.  The mortgage servicer will check to see if the dwelling is your primary residence.”
      • Our law firms work on investment loans if the loans for your primary residence is current and not delinquent.
    • “I have two mortgages.  Will a Making Home Affordable Modification reduce the payment on both?  Only the first mortgage is eligible for a modification.”
    • “What information and documents will I need?  It will help your servicer and speed processing of your application if you gather some information and documents before you call.  You will need:”
      • “Information about the monthly gross 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 assets.”
      • “Information about any second mortgage on your 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 the circumstances that caused your income to be reduced or expenses to be increased (job loss, divorce, illness, etc.).”

We have a solution for your headache with the “Making Home Affordable Modification” plan.  We have independent law firms that work with you and your lenders to do your home loan modifications.