1 Making Home Affordable April 2009 | Making Home Affordable

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Making Home Affordable

April 2009 | Making Home Affordable

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Background


Homeowner Affordability & Stability Plan

Making Home Affordable Program

Home Affordable Refinance

Home Affordable Modification

The Administration’s

Plan

Program for Homeowners

Programs Available

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Home Affordable Refinance

• Purpose - Gives borrowers the opportunity to refinance into more affordable loans at today’s lower rates– Only for borrowers with Fannie Mae or Freddie

Mac loans

• Scope - An estimated 4 to 5 million borrowers are eligible


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Refinance Eligibility Criteria

Borrower –

• Owns and occupies a 1-4 unit property

• Is current on the mortgage

• Has sufficient income to support the new modified payment

• Loan is owned or guaranteed by Fannie Mae or Freddie Mac

• Amount owed on the first mortgage is not more than 105% of property’s current market value

• Refinance will improve the long-term affordability or sustainability of the loan


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Home Affordable Modification

• Purpose - Modifies loans of qualifying at-risk borrowers to achieve affordable payments – Encourages participation from all parties

through use of incentives

• Scope - An estimated 3 to 4 million borrowers are eligible


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Modification Eligibility Criteria

• Owner-occupant of 1-4 unit property

• Amount owed on first mortgage is equal to or less than $729,750

• Mortgage was originated on or before January 1, 2009

• Monthly payment on first mortgage is more than 31% of borrower’s gross (pre-tax) monthly income

• Borrower has a mortgage that is not affordable


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Modification Process

• The Servicer…– Determines if borrower meets minimum

eligibility criteria– Obtains borrower income / expense information

• May rely on verbal information for trial period but will need to verify before modification

– Calculates borrower’s debt to income ratio


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• The Servicer…– Calculates new payment at 31% of borrower’s

gross (pre-tax) monthly income – Performs internal test to determine whether it

makes financial sense to the investor to modify the loan• If yes, borrower enters 3-month trial modification• Permanent modification occurs upon success


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• To get to 31% DTI, the servicer must…

– Reduce the interest rate to as low as 2%– If necessary, extend the loan term to 40 years– If necessary, defer a portion of the principal,

interest-free, until the loan is paid off


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www.MakingHomeAffordable.gov

Informative Video for Homeowners Needing Help

Online Self-Assessment Tools for Home Affordable Refinance & Home Affordable Modification

Easy-to-Use Main Navigation for Homeowners to Quickly Find

Information

On the Home Page, consumers can access: Spanish Content Consumer FAQs Helpful Links in Footer 888-995-HOPESample Home Page


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Are Lenders Required to Participate?• If you have a Fannie Mae or Freddie Mac loan, yes.• For other loans, participation is optional. However,

significant financial incentives are being provided to encourage participation by borrowers, lenders and investors.

• To find out if your servicer is participating go to: www.MakingHomeAffordale.gov


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Beware of Rescue Scams

• Beware of any company that promises:– That it’s safe to skip your mortgage payments– That walking away from your house won’t affect

your credit– They will buy your house & sell it back to you

later– A specific result, for a fee


There is never a fee for getting information about the Making Home Affordable program from your servicer or a HUD-

approved housing counselor.

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Additional Resources

• For Immediate Borrower Assistance:– Call 1-888-995-HOPE (4673)

• Find a HUD-Approved Housing Counselor:– Visit www.MakingHomeAffordable.gov

• Find Your Servicer’s Phone Number:– Refer to your monthly mortgage statement, or– Look up on www.MakingHomeAffordable.gov


Documents

1 Making Home Affordable April 2009 | Making Home Affordable