Guidelines for Homeowner Mortgage Help
If Foreclosure Is Looming Check These Federal Programs
Apr 1, 2009
The U. S. government’s “Making Home Affordable” program can help many who are facing loss of their homes. There are two separate programs under the “Making Home Affordable” umbrella.
One program helps with refinancing of mortgages and the other is aimed at modification of mortgages. Both aim at restructuring mortgages so that homeowners benefit from lower interest rates and end up with lower payments.
Mortgage Refinancing Program
The mortgage refinancing program primarily targets homeowners who are now paying their mortgages on time, but cannot refinance to take advantage of current low mortgage rates. This is often due to a decrease in the value of their home, narrowing the gap between their home equity and the amount due on the mortgage.
A “Home Affordable Refinance” helps borrowers whose loans are held by Fannie Mae or Freddie Mac, giving them more affordable mortgage payments because of a lower interest rate.
Refinancing Guidelines
Guidelines relate to how many living units are in your home, if the loan is owned or guaranteed by Fanny Mae or Freddie Mac, whether mortgage payments are current, and the relationship between what is owed on the first mortgage and the current value of the house. Responses to these questions can be made online. The result is an eligibility determination from the government.
Mortgage Modification Program
The mortgage modification program is aimed at homeowners struggling to make their monthly mortgage payments either because their interest rate has increased, or because they have less income. If they qualify, they will end up with mortgage payments they can afford.
Modification Guidelines
Guidelines for this program relate to whether the home is a primary residence, the amount owed on the first mortgage, why the owner is having trouble making payments, whether the current mortgage was obtained before or after Jan. 1, 2009, and whether or not payment on the first mortgage (including interest, taxes, insurance and homeowner's association dues, if applicable) is more than 31% of the owner’s current gross income.Responses to these questions may be made online. The result is an eligibility determination from the government.
Eligibility Versus Qualification
Those who respond to the questions using the online form will have their answers analyzed and will be advised on what steps to take next. It is important to note that the government can help determine eligibility, but only the servicer of the mortgage loan can decide if a homeowner qualifies for help under these programs. The burden is on the applicant to show sufficient income to make reduced payments on an ongoing basis. Other factors include the conditions of the current mortgage and the value of the mortgaged home.
(A companion article tells how the government stimulus program can help homeowners save their homes.)
SOURCE: U. S. Department of the Treasury website, its financial stability site and the Making Home Affordable program’s online information pages.
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