| President Obama's federal program, called Home | | | | serviced by Fannie or Freddie, but does have some |
| Affordable, offers 2 basic options to struggling | | | | other criteria that you must meet. Here are the |
| homeowners. The first is a streamlined refinance | | | | basics of the Home Affordable Loan Modification Plan: |
| program and the second is a standardized loan | | | | |
| modification plan. You may qualify for help under one | | | | 1. You must live in the home as your primary |
| of these programs - but which one is best for your | | | | residence |
| situation? Here is some information on the programs | | | | 2. Your principal balance must be less than $729,750 |
| and what you need to qualify for each one to help | | | | for 1 unit, more for 2-4 units |
| you decide. | | | | 3. Loan must have been originated prior to January 1, |
| The Home Affordable Refinance Plan is designed to | | | | 2009 |
| help homeowners who are current on their | | | | 4. Your current payment, including taxes, insurance |
| mortgage, but have been unable to refinance due to | | | | and homeowners dues must equal more than 31% of |
| a reduction in their home's value. The program will | | | | your monthly income |
| offer 30 or 15 year terms and will be subject to | | | | 5. Be able to demonstrate a financial hardship situation |
| current market rates and closing costs. Here are the | | | | exists |
| basic requirements for eligibility with this government | | | | If you answered yes to all of those items, you could |
| subsidized refinance program: | | | | be a good candidate for this loan modification plan. |
| | | | Lenders are more motivated to help homeowners |
| 1. Cannot have been delinquent more than 30 days in | | | | under this program because they will be paid by the |
| the last 12 months | | | | Treasury Department for every qualified loan that is |
| 2. Must live in the home as your primary residence | | | | modified. You do not have to be late on your |
| 3. Loan is owned or controlled by Fannie Mae or | | | | payments to apply, but you must show that an |
| Freddie Mac | | | | imminent hardship exists that will cause future |
| 4. You owe no more than 125% of your homes | | | | delinquencies. |
| current value | | | | Second loans are also eligible under the Home |
| 5. Must be able to prove income to support new | | | | Affordable Modification plan. Interest rates will be |
| mortgage payments | | | | reduced to as low as 1%, and certain loans may be |
| 6. Only applies to first trust deeds-if you have a | | | | retired or forgiven altogether with the Treasury |
| second that lender must agree to subordinate behind | | | | Department reimbursing the lender at 12 cents on the |
| the new loan | | | | dollar. If you have a second loan, be sure to apply |
| If you can meet these qualifications, then the | | | | for a loan workout on that mortgage as well. |
| refinance program may be an option for you. Keep in | | | | To apply for the loan modification plan, you will be |
| mind that if your current loan has a negative | | | | asked to prepare an application and provide certain |
| amortization option with an extremely low rate, or | | | | documentation. You must be sure to complete your |
| you are paying interest only, your new payment may | | | | forms correctly so that you clearly demonstrate your |
| actually increase. The goal of this program is to offer | | | | ability to pay and maintain the new modified |
| the opportunity for homeowners to obtain a fixed | | | | payment. Your lender will base it's decision mainly on |
| interest rate loan. | | | | the information you provide to them, so make sure |
| The loan modification plan has different requirements | | | | you do it right. This could be the second chance you |
| for approval. Your home loan does not have to be | | | | need to stay in your home. |