Question"Seems that your home affordable plan only applies to those who have loans through Fannie Mae or Freddie Mac. What is being done to help those current on their mortgages, but struggling, and have a loan through an independent bank?"
Debora, Old Bridge, NJ View Answer
AnswerThe Making Home Affordable Refinance Program is designed specifically to help those whose home values may have fallen relative to their mortgage values. The program is available to homeowners with a first loan, owned or guaranteed by Fannie Mae or Freddie Mac, that is 80-125% of the value of the home.
The eligibility criteria for the Home Affordable Modification Program are:
- Be an owner-occupant in a one to four unit property,
- Have an unpaid principal balance that is equal to or less than $729,750 for one unit properties (there is a higher limit for two to four unit properties),
- Have a loan that was originated on or before January 1, 2009,
- Have a mortgage payment (including taxes, insurance, and home owners association dues) that is more than 31% of your gross (pre-tax) monthly income, and
- Have a mortgage payment that is not affordable, perhaps because of a significant change in income or expenses.
The Home Affordable Modification Program is focused on getting as many families as possible who are struggling with their mortgages into a mortgage that they can afford over the long-term. It does this by reducing borrowers’ interest rates and monthly payments down to a level they can afford. In addition, the plan permits lenders to get to a level of affordability in a variety of ways, including reducing interest rates, extending terms, or writing down principal.
Contact your loan servicer to find out if you might be eligible for the Home Affordable Modification Program. If you have additional questions, you can also contact the Homeowner's HOPE™ Hotline at 1-888-995-HOPE.
Question"I am an hourly paid employee asking for a loan modification to my loan servicer. Since I have overtime income on regular basis but not always, is this income taken into consideration when calculating my gross monthly income?"
Pedro, Kissimmee, FL View Answer
AnswerYes, your overtime income will be taken into account when calculating your gross monthly income if you apply for a Home Affordable Modification.
The guidelines for servicers participating in the Home Affordable Modification Program state: "The borrower’s "monthly gross income" is the borrower’s income amount before any payroll deductions and includes wages and salaries, overtime pay, commissions, fees, tips, bonuses, housing allowances, other compensation for personal services, Social Security payments, including Social Security received by adults on behalf of minors or by minors intended for their own support, and monthly income from annuities, insurance policies, retirement funds, pensions, disability or death benefits, unemployment benefits, rental income and other income."
Contact your loan servicer to find out if you might be eligible for the Home Affordable Modification Program. If you have additional questions, you can also contact the Homeowner's HOPE™ Hotline at 1-888-995-HOPE.
The following questions were submitted during the White House's Open for Questions event - an archived version of the event is located here: www.whitehouse.gov/openforquestions.
Question"Why do I have to be to the point of foreclosure to get any help with my mortgage? Why aren't you helping the people who want to PREVENT foreclosure?"
MistyLee, Providence, RI View Answer
AnswerWe share the goal of reaching at-risk borrowers now, while they are still current on their payments. The Home Affordable Refinance Program is available to current borrowers and only current borrowers, giving responsible borrowers who have made their payments on time an opportunity to refinance into lower rates and more affordable payments.
The Home Affordable Modification Program offers extra incentives to reach borrowers before they go delinquent. The foreclosure crisis is dragging down property values and destroying the neighborhoods of millions of people. The President's program strikes an appropriate balance by enabling lenders and borrowers to agree to affordability modifications but steering it to responsible homeowners.
The plan targets borrowers who have played by the rules in the following ways:
- The plan only applies to owner-occupied properties and does not apply to investors or speculators.
- The plan targets greater resources at people that have played by the rules and paid their bills on time.
- The plan does not require people to become delinquent before it provides support.
- The plan incentives are tied only to success, not failure.
- The plan does not apply to millionaire homes and only GSE conforming loans are eligible.
Question"I pay my bills and taxes on time and always have. Why am I now paying for the poor fiscal decisions of my neighbor who signed a mortgage that he could never afford or my friend who defaults on credit card debt? What happened to consequences?"
Cobber99, Palm Springs, CA View Answer
AnswerThis program targets responsible, middle class borrowers and enables them to modify or refinance their mortgages in a way that will allow them to avoid being thrown out of their homes. And that benefits everyone since foreclosure damage isn't limited to just the house that is lost. Foreclosures have dragged down entire neighborhoods and threaten to ignite a vicious cycle of additional foreclosure and decline in housing values. Foreclosures reduce the value of neighboring properties and lead to increased crime and property abandonment. Reducing the number of foreclosures will help stabilize home values or reduce their fall even for those who do not participate in the plan. Treasury estimates that the plan would stabilize as much as $6,000 of the average home’s value at levels higher than they otherwise would have been.
Question"Why do banks approve people for loans they can't afford? My husband & I are buying a new home. We estimate we can afford a home that costs $225,000. The bank approved us for $450,000. Perhaps a new "formula" for approval is in order?"
Karen H, Apex, NC View Answer
AnswerThe objective of the Making Home Affordable Plan is to facilitate affordable modifications that are sustainable going forward. Lenders must take the first loss in doing a modification, and the worse their original loan, the bigger the loss they must take in getting the borrower down to 38% debt-to-income without any government subsidy. Our plan leaves lenders on the hook for the mortgages they made, and if a sustainable modification is not a viable loan, the government will not pay anything to get it to work.
Question"Why can't the refinancing of your home, at the home's current values, be availabe to any homeowner, not just the ones in trouble now. Help the homeowners across the board, give us all relief, treat us all the same."
grandma2009, Virginia View Answer
AnswerTogether with the Federal Reserve’s actions, our housing policies have helped to bring down mortgage rates to historic lows, giving millions of responsible Americans who are current on their mortgage payments the ability to refinance. A typical homeowner can now refinance and save.
As of April 9th:
- Rates on 30-year mortgages have dropped to an all-time low of 4.78 percent.
- Refinancing applications are up 88 percent (Mortgage Banker’s Association).
- Fannie Mae refinanced $77 billion of mortgages in March, nearly twice the February amount, and their highest volume in one month since 2003.
Question"Mr. President: What can be done to assist homeowners paying their mortgages but facing significant losses in equity? As a category, it is difficult for these responsible people to refinance into the more favorable mortgages now available."
HelenKathryn, Seattle, WA View Answer
AnswerThe Making Home Affordable Refinance Program is designed specifically to help those whose home values may have fallen relative to their mortgage values. The program is available to homeowners with a first loan, owned or guaranteed by Fannie Mae or Freddie Mac, that is 80-105% of the value of the home.
We're focused on getting as many families as possible who are struggling with their mortgages into a mortgage that they can afford. The Home Affordable Modification Program gets the borrower's interest rates and monthly payments down to a level they can afford in a way that is most cost effective for taxpayers. That will keep millions from being foreclosed on. Our plan permits lenders to get to a level of affordability in a variety of ways, including reducing interest rates, extending terms, or writing down principal. In addition, we have incorporated principal write downs into our incentive structure in a productive way - success payments to homeowners are available to help pay down principal more quickly.
The Administration on April 28 announced the MHA Second Lien Program and incorporation of Hope for Homeowners, a program designed specifically to help underwater borrowers, into the Making Home Affordable Program. The Administration is strongly supporting legislation to improve Hope for Homeowners so that it can reach more borrowers, and help to increase the equity those homeowners own in their homes.
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