Mortgage Topics

Details of the $75 billion Homeowner Stability Initiative announced in February were unveiled on March 4, 2009.

The program falls into two main categories: Home Affordable Refinance and Home Affordable Modification.

The Refinance program aims to help those who are not able to refinance through traditional means due to a decrease in the value of their home above the 80% loan-to-value mark.

The Modification program aims to help those whose do not qualify for any type of refinancing and struggling to make their mortgage payments.

Participating lenders have yet to roll out the details, but there are some initial steps to take to get prepared. First answer four basic questions:

1. Is the home in question your primary residence?
2. Do you have a Fannie Mae or Freddie Mac loan? If you don’t know call or fill out the online form:    · Fannie: 1-800-7FANNIE or www.fanniemae.com/homeaffordable  · Freddie: 1-800-FREDDIE or https://ww3.freddiemac.com/corporate/
3. Are you current on your mortgage payments?
4. Do you believe that the amount you owe on your first mortgage is about the same or less than the current value of your house?

If you answered “Yes” to all of the above questions, you may qualify for a Home Affordable Refinance.

The benefit of the Refinance program is to get borrowers into today’s market rates even when the loan-to-value in the home is higher than 80%.

The next step will be to gather the following basic information to start:

• Information on your monthly gross (before taxes) income like recent paystubs
• Most recent income tax returns
• Information about your second mortgage, if any
• Account balances and minimum monthly payments on all of your credit cards, student loans, and car payments

Once you have this information, call your mortgage lender and ask about the application process.

If you answered “No” to any of the questions, then you may not qualify for a refinance but a Home Affordable Modification by answering “Yes” to the following four questions:

1. Is the home in question your primary residence?
2. Is the amount you owe on your first mortgage =< $729,750?
3. Are you having trouble paying mortgage because of an increase in your mortgage payment or reduction in your income or have you suffered a hardship (medical) that increased your expenses?
4. Did you get your current mortgage before January 1, 2009?

If you answered “Yes” to all of the Modification program questions, then the next step will be to gather all the information required for a Home Affordable Refinance (noted above) plus a letter describing the circumstances that caused your income to be reduced or expenses to be increased (job loss, divorce, etc).

The benefit of the Modification program is to get your monthly payment down to 31% of your gross income with a rate as low as 2% for 5 years and increases 1% thereafter.

Details of the guidelines can be found at the following link: http://www.treas.gov/press/releases/reports/modification_program_guidelines.pdf