Call it what you must but it looks like the Obama administration is making every attempt to keep people in their homes, whether most agree with it or not. The plan was first introduced 2 weeks ago but now details have been released on how the plan will actually begin to work.
So the Homeowner Affordability and Stability Plan will help borrowers that have good repayment history but are otherwise not able to refinance because they are now currently “underwater” on their mortgage. Only Fannie Mae and Freddi Mac mortgages will qualify for the program.
The plan is broken into a few different areas. Home Affordable Refinance aims at helping homeowners who cannot refinance out of their current mortgage because they don’t have the necessary equity which is 80%. The Home Affordable Modification seeks to set industry standards in loan modifications.
Who Qualifies
You qualify if:
- Your loan was originated before January 1, 2009
- You will need to sign IRS Form 4506 T, provide fully document income, two years of pay stubs, recent tax returns, financial hardship affadavit
- Must be a primary residence. Sorry investors and boarded up houses
- First lien principal loan amount up to $729,750
- New loan cannot be more than 31% of borrowers monthly gross income
- Loans can be modified thru December 31, 2012
- Only once can the loan be modified
The overall target for homeowners being help is in the ball park of 7 to 9 million.
And for the rest
For loan servicer’s, a “pay for performance” is also thrown into the mix. Look at it as an incentive for servicers to make a better attempt to modify the loan of a troubled borrower. Loan servicers will get $1000 upfront for a loan that fits the criteria, as well as another $1000 if the loan is in good standing three years down the road. Loans apparently can start being modified immediately.
There also doesn’t seem to be a wink at trying to influence that mythical 4% interest rate. Looks like the government will let the free market figure that one out or until another intervention occurs again. This is for homeowners that need help, not want lower rates.
The announcement still lacks certain transparency for who, what and how this is going to get accomplished. Oh well, another wait is in order I guess.
Here are some links:
Homeowner Affordability and Stability Plan HUD Site
US Treasury Press Release
Check Your Lender’s Website
