The Homeowner Affordability And Stability Plan
The Obama administration's announcement of the Homeowner Affordability And Stability Plan may offer some assistance to homeowners with unaffordable mortgage payments. The plan is targeted to help up to 7 to 9 million homeowners.
This program is designed to be a shared effort between government and lender resources and currently applies to loans held or securitized by Fannie Mae or Freddie Mac. If you don't know if your mortgage is in this category, call your lender after the plan takes effect on March 4th, 2009 to find out.
Unlike current lender conditions the new plan does not require that a homeowner be behind on payments to get a loan modification. If you are struggling to stay current or are experiencing a loss of income due to job loss, increased expenses, or an adjustable rate reset the plan may offer some relief.
The Homeowner Affordability and Stability Plan is designed to help only owner occupied properties, not investment, rental, or vacation homes. One exception is that if you live in one unit of a 2,3 or 4 unit multi-family housing unit.
Second Mortgages and Lines Of Credit? - Do Not Apply
Only the first mortgage on
owner occupied homes will apply to this loan modification process. Many homes have liabilities that are split between a first and second mortgage. This was a popular way to avoid paying mortgage insurance on the entire loan amount. In a way this strategy backfires here.
The plan also helps those who have experienced a drop in home value in comparison to their mortgage or own more on the home than it is worth.This will help those that are currently trying to sell those homes. Again this is limited to include only those whose first mortgage exceeds 105% of the home's current market value. Those with second mortgages and lines of credit may be out of luck.
Do You Qualify For The Homeowner Affordability And Stability Plan?
The definitive answer will not be known until the plan actually takes effect on March 4th however a few preliminary details are now available. You may qualify if your mortgage:
- Payment is more than 31% of your monthly gross income
- Does Not Exceed Fannie Mae and Freddie Mac Limits
- Is on An Owner Occupied Home
- Is a First Mortgage
- (First Mortgage Only) Exceeds 105% of your Home's Market Value
Applying For The Program
The plan is voluntary for lenders. Without mandatory participation it is not likely that the plan will be implemented by lenders in a timely or efficient fashion if the other voluntary lending guidelines that have been requested are any example.
Added Bonus
In addition to helping those currently affected by the housing and foreclosure crisis the plan intends to reward those who stay current on their mortgage payments after the modification. For those that stay current on their payments for five years after their loan modification up to $5000 is available to reduce their mortgage at the end of that period.
Facing Foreclosure Now?
If foreclosure is imminent or you do not qualify for the Homeowner Affordability And Stability Plan you may want to consider contacting a Loan Modification Service to see if you qualify for plans that lenders currently have in place.
