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Help from the Homeowner Affordability and Stability Plan.

The fairly new federal government sponsored mortgage assistance plan, also known as the Making Home Affordable program, will help 7 to 9 million homeowners refinance, restructure, or modify their mortgages to avoid foreclosure or lower their monthly payments. In addition to this option, there are many other resources available, and find a listing of other federal government mortgage and foreclosure programs.

The program can be complicated. Some of the common questions and answers for this program include :

I am not in danger of foreclosure? Do I get any assistance?

Those homeowners that are current on their existing mortgage but can't refinance into a lower interest-rate home loan because their homes have fallen in value can refinance into a 30- or 15-year, fixed-rate loan under the plan. However, they can do this only if their mortgage is held by mortgage finance companies Freddie Mac or Fannie Mae. Also, a loan modification is an option for all homeowners, regardless of who holds your mortgage.

To qualify for any form of aid, homeowners cannot owe on their first mortgage more than 125 percent of their home's current value. As an example, if your home is worth $100,000, your first mortgage can't exceed $125,000. (This increase was the result of the expansion of the program. Continue.

Those borrowers who have a second mortgage are eligible for assistance as long as their first mortgage isn't more than 105 percent of their total home's value. You should apply to the program though, as the the value of your home won’t be known, and will be determined after you apply to refinance your mortgage. Some people still qualify even though they thought they did not meet this requirement.

One reason it is complicated is critics say that it is going to be difficult for borrowers to figure out whether their loan is held by Fannie or Freddie. It is also limited to certain borrowers and homeowners due to those home valuation issues mentioned.




What other government mortgage programs currently exist?

If you do not qualify, then there are numerous government programs to try and that exist. Options continue to grow and evolve, and both the federal government, and local state governments, keep creating additional options for homeowners.


Will my mortgage payment change?

Yes. The banks, financial institutions, and lenders participating in the Homeowner Affordability and Stability plan need to agree to reduce your monthly mortgage expenses and payments to 38% of the borrower’s gross monthly income. As an example, if you make $5,000 per month gross income then your new, modified mortgage payment can’t be more than $1,900 per month. After that happens, the government will come in and will then help get your mortgage payment down to 31% of your gross income. Keeping with this example your payment would end up being a total of $1,550. This is a significant reduction in your mortgage payment.

What if my mortgage is underwater?

If you owe more on your mortgage balance that the current value of your home, if the mortgage exceeds the current property value, then you know it can be extremely difficult to refinance or get assistance. Solutions for so-called "underwater" mortgages are very limited, however there are some options, including the Home Affordable Refinance Program (HARP) and Home Affordable Modification Program (HAMP). More banks are also now working with homeowners in offering solutions for these types of situations.

I am on the brink of foreclosure. Will this help?

If you are are behind on your mortgage payments or if you are just struggling to keep current, you should be able to qualify for a mortgage modification under the Homeowner Affordability and Stability Plan.

There are some conditions to qualify. The house must be your primary residence, your mortgage payment must be higher than 31 percent of your monthly gross income and your loan can’t exceed current Freddie Mac and Fannie Mae loan limits, which will vary by region and max out at nearly $729,750.

If you are an owner of two-, three- and four-unit properties you are also eligible for assistance under this program as long as they live in one unit as a primary residence. Only first mortgages are eligible for a modification.





Any other breaks for current homeowners?

In addition to the mortgage assistance from the Making Home Affordable program, homeowners can receive a tax credit of up to $1,500 by making their homes more energy-efficient this year or next. This will also help families save on their heating and utility bills. Many projects qualify for this credit, such as installing energy-efficient windows, furnaces, doors, or air conditioners, or adding additional insulation. Homeowners can receive back 30 percent of their total expenses, up to the $1,500, as a tax credit.

When does this Making Home Affordable Program program start?

The loan modification and refinancing programs is in effect now, and more details are available from your lender and servicer. Contact them for additional details, or also explore the resources of a HUD approved counselor.

What other options do I have?

There are many other mortgage assistance programs available today, including state assistance programs and loan modifications. These are in addition to what is listed above. If you decide to apply for the Homeowner Stability and Affordability plan, then prepare. Start collecting all necessary documents to give to your lender. These include your most recent pay stubs and/or other documents detailing the income you receive, information about your second mortgage if you have one, your most recent tax return, payment information on your credit cards and bills if you carry a monthly balance, and payment information on all other debts and loans, like car and student loans.

What if I'm facing an immediate foreclosure?

You need to immediately contact your mortgage lender or mortgage servicer. Or call a non-profit HUD counseling agency in your state. Many mortgage lenders said they will postpone foreclosure sales on home loans that could qualify for the modification from this program.

Mortgage borrowers are eligible as long as their first mortgage isn't more than 125 percent of their home's value. The value of your property will be determined after you apply to refinance.

By Jon McNamara

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