Do You Qualify for Help Through the Government's Housing Plan?

Francine L. Huff
LoanBiz Columnist

Article Rating , 4 out of 5 based on 1 votes

The good news is the Obama administration's Homeowner Affordability and Stability Plan is aimed at helping up to 9 million homeowners who are struggling to pay their mortgage loans. The bad news is that it's a little confusing determining exactly who qualifies for aid. The rescue comes in two parts: The Home Affordable Refinance Plan and the Home Affordable Modification Plan.

Home Affordable Refinance Plan Qualification

1. Your mortgage must be held or secured by Freddie Mac or Fannie Mae. Call your mortgage lender ASAP to find out if either of them has your loan.

2. You must live in the home you want help with. That means investment properties don't qualify.

3. You must be in good standing (no late payments in the last 12 months) on your current home loan.

4. Your new refinance can't exceed 105% of your home's current appraised value.

Home Affordable Modification Plan Qualification

1. To qualify for the loan modification program, your housing costs must exceed 31% of your gross income. Also, the unpaid balance of your mortgage must be below $729,750 (multifamily homes have a higher limit).

2. You may be required to attend credit counseling sessions.

3. Modification takes place first by lowering the interest rate (to as low as 2% if necessary), extending the term of the loan (as long as 40 years), and finally to cramming down the balance (to no less than the appraised value of the home). You must be able to realistically make a modified payment. If you have little or no income, you won't qualify.

4. Mortgage servicers are not required to make a modification if default is imminent or you are at least 60 days delinquent on your mortgage. In that case, the servicer has to determine if modifying your loan will generate more cash flow over five years than not modifying it (and presumably allowing you to go into foreclosure).

These programs have been put together to help a large group of American homeowners. Check with your current loan servicer to see if you might be one of them.

Francine Huff

Francine Huff is a freelance journalist and the author of The 25-Day Money Makeover for Women. She has appeared on a variety of TV and radio shows. Visit her Web site, www.Huffwrites.com.

0http://US Treasuryhttp://www.ustreas.gov/press/releases/reports/modification_program_guidelines.pdf

Michael McAuliff • What home bailout means to you: President Obama rolls out guidelines for rescue plans • http://Daily Newshttp://www.nydailynews.com/news/politics/2009/03/04/2009-03-04_what_home_bailout_means_to_you_president.html

About the Author
Francine L. Huff is a freelance journalist and the author of The 25-Day Money Makeover for Women. She has appeared on a variety of TV and radio shows.

Editor's Selections: Additional Reading
Related Articles & Tools
Quick Survey

Your answer: 
Correct answer: 

Total votes: 

Mortgage Industry Update Keep up with the latest industry buzz.

Email this article

Please fill in a valid name.
Please fill in a valid e-mail.
Please fill in a recipient name.
Please fill in a valid recipient e-mail.
Email loading...