The Obama Mortgage: Making Home Affordable, Once Again

You may qualify for the new $75 billion mortgage loan modification program signed by President Obama signed into law.

According to the official government Web site, Making Home Affordable will offer assistance to as many as 7 to 9 million homeowners, making their mortgages more affordable and helping to prevent the destructive impact of foreclosures on families, communities and the national economy.

The Obama administration's new initiative, called Making Home Affordable and also referred to as the Obama Mortgage, is comprised of two separate programs: Home Affordable Refinance and Home Affordable Modification.

HOME AFFORDABLE REFINANCE

The Home Affordable Refinance program will be available to 4 million to 5 million homeowners who have a solid payment history on an existing mortgage owned by Fannie Mae or Freddie Mac. Normally, these borrowers would be unable to refinance because their homes have lost value, pushing their current loan-to-value ratios above 80 percent.

The objective of Home Affordable Refinance is to provide creditworthy borrowers who have shown a commitment to paying their mortgage the opportunity to get into a mortgage with payments that are affordable today, and sustainable for the life of the loan.

Under the Home Affordable Refinance program, many people will now be able to refinance and take advantage of today's lower mortgage rates, or refinance their adjustable-rate mortgages into more stable mortgage products such as the 30-year fixed rate loan. Owners can refinance up to 105 percent of the new value of the home.

While many people will see a reduction in their mortgage payments with Home Affordable Refinance, some who were paying interest-only mortgage loans, or had a low introductory rate scheduled to increase in the future, may not see their current payment decrease. However, even those people could still save a great deal over the life of the loan by applying for the Home Affordable Refinance, by avoiding future mortgage payment increases.

ARE YOU ELIGIBLE FOR HOME AFFORDABLE REFINANCE?

To qualify for Home Affordable Refinance:

• The loan on your property is owned or secured by Fannie Mae or Freddie Mac.


• You must be are current on your mortgage payments (no more than 30 days late in the last 12 months).


• The amount you owe on your first mortgage is the same or slightly less than the current value of your house.


• You have sufficient income to support the new mortgage payments.

• The mortgage loans must have originated on or before Jan. 1, 2009.


• The mortgage loans must be first-lien loans on owner-occupied properties with unpaid principal balance up to $729,750. Higher limits are allowed for owner-occupied properties with two to four units.


• The mortgage payment (including taxes, insurance, and homeowners association dues) must be more than 31 percent of your gross monthly income.


• All borrowers must fully document income, including a signed IRS 4506-T, two most recent pay stubs, most recent tax return, and must sign an affidavit of financial hardship.


• Property owner occupancy status will be verified through borrower credit report and other documentation.


• Modifications can start from now until Dec, 21, 2012. Loans can be modified only once under the program.

• The monthly gross income of all the borrowers on your loan


• Recent pay stubs


• Your most recent income tax return


• Information about any second mortgage


• Account balances and minimum monthly payments due on all credit cards


• Account balances and monthly payments on all other debts such as student loans and car loans.