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Do IT this week: Layering
By Mary Beth Breckenridge
Beacon Journal staff writer
POSTED: 11:42 a.m. EDT, Mar 13, 2009
The mortgage relief promised to struggling homeowners is finally becoming available.
The U.S. Treasury Department released guidelines last week for Making Home Affordable, a program that lets homeowners refinance or modify their mortgages in the hope of avoiding foreclosure. That means loan servicers can begin offering the loan relief immediately, said Jenni Engebretsen, a spokesperson for the department.
Making Home Affordable is expected to help up to 9 million homeowners, the department estimates.
The program was funded by two measures signed into law last year. Here are details of its refinancing and loan-modification programs:
Refinancing
This program targets homeowners who have stayed current on their mortgage payments but haven't been able to refinance at the current low rates because of decreasing home values. Those homeowners have found themselves in a bind because as the value of their homes has declined, the amount they owe has come to represent a bigger percentage of their homes' worth. Those who owe more than 80 percent of their homes' current value haven't been able to refinance. The plan gives Fannie Mae and Freddie Mac the government backing to refinance qualifying mortgages to fixed-rate, 15- or 30-year loans. Refinancing won't reduce the loan's principal, but it will decrease the amount of interest the homeowner pays over the life of the loan.
These are the requirements for refinancing:
• Your loan must be owned or scrutinized by Fannie Mae or Freddie Mac.
• You must own and occupy a one- to four-unit property.
• You cannot have been more than 30 days late on a mortgage payment in the last 12 months.
• You must owe no more than 105 percent of the current value of the house on a first mortgage.
• You must have a stable income that can support the new mortgage payments.
To ask about refinancing, call your lender or mortgage servicer, the company that collects your mortgage payments. The phone number should be on your monthly mortgage bill or coupon book.
Before you call, you may want to check out www.FinancialStability.gov , the government's Web site on the Making Home Affordable program. The Borrower Q&A includes a list of information to gather before calling your lender. Don't know whether you have a Fannie Mae or Freddie Mac loan? You can call or go online to find out. To contact Fannie Mae, call 800-7FANNIE (800-732-6643) or fill out the form at www.fanniemae.com/homeaffordable. Freddie Mac's phone number is 800-FREDDIE (800-373-3343). The Web site is www.freddiemac.com/avoidforeclosure. The financial support for the refinancing program comes from the Housing and Economic Recovery Act, enacted in July 2008. It doubled to $200 billion the amount of mortgage-backed securities the Treasury Department can buy from Fannie Mae (the Federal National Mortgage Association) and Freddie Mac (the Federal Home Loan Mortgage Corp.).
Loan modification
This program is for homeowners who are at risk of defaulting on their mortgages, either because they're experiencing financial hardship or their interest rate has increased. Under the program, the government is offering financial incentives to loan servicers for lowering interest rates or making other changes to the terms of these loans. The interest rate can be lowered to as little as 2 percent. If that's still not enough to make the payments affordable, the servicer may extend the length of the loan, defer repayment on part of the principal or even forgive part of the debt. How long the new interest rate is good for depends on how low the rate is. If the new rate is at or above the prevailing market rate, it will stay in effect for the life of the loan. If it's below the market rate, it will be good for at least five years. It can then increase by up to 1 percentage point a year, but it can never be higher than the market rate on the day the loan was modified. Borrowers get an incentive for keeping up with their payments. As long as they stay current, the government will make monthly payments to reduce their principal balance. That reduction could total as much as $5,000 over five years.
Here are the requirements for getting a home-loan modification:
• You must own and occupy a one- to four-unit property. • Your loan's principal balance must be $729,750 or less on a single-family residence. Two- to four-unit properties have higher limits.
• Your loan must have originated before Jan. 1, 2009.
• Your mortgage payment, including taxes, insurance and homeowners association dues, must exceed 31 percent of your gross (pre-tax) monthly income.
Unlike refinancings, loan modifications aren't limited to Fannie Mae and Freddie Mac mortgages. But your loan servicer has to elect to participate. The program is just now being rolled out, but as servicers come on board, they'll be listed at FinancialStability.gov. If you think you qualify, gather the financial information recommended on the site, and then call your servicer. You can also get free guidance from a housing counselor at 888-995-HOPE (888-995-4673). If you've already missed at least one mortgage payment, the government recommends you call a counselor immediately. The loan modification program is funded by $75 billion allocated under the Troubled Assets Relief Program, which was created in October when the Emergency Economic Stabilization Act of 2008 was enacted.
Mary Beth Breckenridge can be reached at 330-996-3756 or mbrecken@thebeaconjournal.com.
Avoid scams The government warns homeowners to beware of foreclosure-rescue scams related to its Making Home Affordable program. It offers this advice on the program's Web site, http://FinancialStability.gov: • Ignore any person or company that asks you to pay for housing counseling. Advice and information about the program is always free from your lender or a housing counselor approved by the U.S. Department of Housing and Urban Development. The Web site has links to HUD-approved housing counseling agencies. • Similarly, ignore anyone who asks you to pay a fee for modifying an existing loan to avoid foreclosure. • Beware of anyone who offers to save your home if you sign or transfer over the deed to your house. Don't sign over your deed to any organization or individual unless you are working directly with your mortgage company to forgive your debt. • Never make your mortgage payments to anyone other than your mortgage company without its approval.
The mortgage relief promised to struggling homeowners is finally becoming available.
The U.S. Treasury Department released guidelines last week for Making Home Affordable, a program that lets homeowners refinance or modify their mortgages in the hope of avoiding foreclosure. That means loan servicers can begin offering the loan relief immediately, said Jenni Engebretsen, a spokesperson for the department.
Making Home Affordable is expected to help up to 9 million homeowners, the department estimates.
The program was funded by two measures signed into law last year. Here are details of its refinancing and loan-modification programs:
Refinancing
This program targets homeowners who have stayed current on their mortgage payments but haven't been able to refinance at the current low rates because of decreasing home values. Those homeowners have found themselves in a bind because as the value of their homes has declined, the amount they owe has come to represent a bigger percentage of their homes' worth. Those who owe more than 80 percent of their homes' current value haven't been able to refinance. The plan gives Fannie Mae and Freddie Mac the government backing to refinance qualifying mortgages to fixed-rate, 15- or 30-year loans. Refinancing won't reduce the loan's principal, but it will decrease the amount of interest the homeowner pays over the life of the loan.
These are the requirements for refinancing:
• Your loan must be owned or scrutinized by Fannie Mae or Freddie Mac.
• You must own and occupy a one- to four-unit property.
• You cannot have been more than 30 days late on a mortgage payment in the last 12 months.
• You must owe no more than 105 percent of the current value of the house on a first mortgage.
• You must have a stable income that can support the new mortgage payments.
To ask about refinancing, call your lender or mortgage servicer, the company that collects your mortgage payments. The phone number should be on your monthly mortgage bill or coupon book.
Before you call, you may want to check out www.FinancialStability.gov , the government's Web site on the Making Home Affordable program. The Borrower Q&A includes a list of information to gather before calling your lender. Don't know whether you have a Fannie Mae or Freddie Mac loan? You can call or go online to find out. To contact Fannie Mae, call 800-7FANNIE (800-732-6643) or fill out the form at www.fanniemae.com/homeaffordable. Freddie Mac's phone number is 800-FREDDIE (800-373-3343). The Web site is www.freddiemac.com/avoidforeclosure. The financial support for the refinancing program comes from the Housing and Economic Recovery Act, enacted in July 2008. It doubled to $200 billion the amount of mortgage-backed securities the Treasury Department can buy from Fannie Mae (the Federal National Mortgage Association) and Freddie Mac (the Federal Home Loan Mortgage Corp.).
Loan modification
This program is for homeowners who are at risk of defaulting on their mortgages, either because they're experiencing financial hardship or their interest rate has increased. Under the program, the government is offering financial incentives to loan servicers for lowering interest rates or making other changes to the terms of these loans. The interest rate can be lowered to as little as 2 percent. If that's still not enough to make the payments affordable, the servicer may extend the length of the loan, defer repayment on part of the principal or even forgive part of the debt. How long the new interest rate is good for depends on how low the rate is. If the new rate is at or above the prevailing market rate, it will stay in effect for the life of the loan. If it's below the market rate, it will be good for at least five years. It can then increase by up to 1 percentage point a year, but it can never be higher than the market rate on the day the loan was modified. Borrowers get an incentive for keeping up with their payments. As long as they stay current, the government will make monthly payments to reduce their principal balance. That reduction could total as much as $5,000 over five years.
Here are the requirements for getting a home-loan modification:
• You must own and occupy a one- to four-unit property. • Your loan's principal balance must be $729,750 or less on a single-family residence. Two- to four-unit properties have higher limits.
• Your loan must have originated before Jan. 1, 2009.
• Your mortgage payment, including taxes, insurance and homeowners association dues, must exceed 31 percent of your gross (pre-tax) monthly income.
Unlike refinancings, loan modifications aren't limited to Fannie Mae and Freddie Mac mortgages. But your loan servicer has to elect to participate. The program is just now being rolled out, but as servicers come on board, they'll be listed at FinancialStability.gov. If you think you qualify, gather the financial information recommended on the site, and then call your servicer. You can also get free guidance from a housing counselor at 888-995-HOPE (888-995-4673). If you've already missed at least one mortgage payment, the government recommends you call a counselor immediately. The loan modification program is funded by $75 billion allocated under the Troubled Assets Relief Program, which was created in October when the Emergency Economic Stabilization Act of 2008 was enacted.
Mary Beth Breckenridge can be reached at 330-996-3756 or mbrecken@thebeaconjournal.com.
Avoid scams The government warns homeowners to beware of foreclosure-rescue scams related to its Making Home Affordable program. It offers this advice on the program's Web site, http://FinancialStability.gov: • Ignore any person or company that asks you to pay for housing counseling. Advice and information about the program is always free from your lender or a housing counselor approved by the U.S. Department of Housing and Urban Development. The Web site has links to HUD-approved housing counseling agencies. • Similarly, ignore anyone who asks you to pay a fee for modifying an existing loan to avoid foreclosure. • Beware of anyone who offers to save your home if you sign or transfer over the deed to your house. Don't sign over your deed to any organization or individual unless you are working directly with your mortgage company to forgive your debt. • Never make your mortgage payments to anyone other than your mortgage company without its approval.
Comments
Click here to post your comments
ashtabula, oh
Posted 12:46 PM, 03/13/2009
I am very pleased to see that homeowners finally are getting some deserved relief. Most are reputable people, and not at fault for the housing market crunch. Why should they be left to pay for those who milked and bilked the housing market into the shambles it is. While pleased, I do believe this government can, and should, do more. One problem I have with this relief program is where it states a borrower cannot be late with a payment in a 12-month period. This will only harm many homeowners who would appreciate the break. Look at it the way it is: If these homeowners could afford to keep their payments current, they would not need intervention and relief.
Posted 09:37 PM, 03/13/2009
Qualifications;
You-ba hab-ta to suppo-ta da right candidate!
rootstown, oh
Posted 11:09 AM, 03/14/2009
i hope this helps a lot of people out of their bind.this should do a lot more than the bush stimulus check.
akron, oh
Posted 01:24 PM, 03/14/2009
https://www.naca.com/index_main.jsp
akron, oh
Posted 01:26 PM, 03/14/2009
the above link will take you to a non-profit group that refinances mostly sub-prime mortgages. And, they have done this for years without government bailouts! https://www.naca.com/index_main.jsp
