What is the Obama Loan Relief Plan?

Under President Obama's "Making Home Affordable" plan, loan relief is available to approximately 9 million homeowners across the country. The plan was designed to help stabilize the struggling real estate industry. It essentially offers aid for many Americans to lower their monthly mortgage amount to one more affordable. There are two main loan relief assistance programs under this plan: Home Affordable Refinancing and Home Affordable Modification.

Home Affordable Refinancing

The Home Affordable Refinancing program is for those homeowners who pay their mortgage on time but are unable to refinance due to a decrease in the value of their home. The requirements to participate in this program are as follows:

  • Must be the owner of a one to four unit home
  • Loans must currently be held by Fannie Mae or Freddie Mac
  • Must be current on mortgage payments
  • The amount owed on the current mortgage must be less than or equal to the current value of the home.

Something to note under the HAR program is that "current" means you have not been more than 30 days late in the last 12 months. Also, you can be eligible if your mortgage does not exceed 125% of the current market value of the home.

To apply for the HAR plan you will need financial records and mortgage information.

Home Affordable Modification

The Home Affordable Modification program is for those who are struggling to make their mortgage payments due to unemployment, higher interest rates, or other hardship issues. The bottom line is that they simply cannot afford the mortgage. Remember that a loan "modification" is not a new loan, but a change in loan terms. The eligibility requirements for this program are as follows:

  • Current home must be primary residence
  • Mortgage must be held by Fannie Mae or Freddie Mac
  • Mortgage must be less than or equal to $729,750
  • Must have proven difficulty to make current mortgage payment
  • Must have be granted current mortgage before January 1, 2009
  • Payment on the current mortgage, including all applicable taxes, insurance, fees, must be more than 31% of current gross income.

Under this plan borrowers will basically receive $1000 per year for up to five years if they remain current on the modified loan.

To apply for the HAM plan you must submit a Hardship Affidavit form along with extensive financial records (savings, tax returns, assets) to your mortgage provider. The provider can evaluate your circumstance and help with the loan relief process.

Those That DO NOT Qualify

Single-family residential properties that do not qualify for the loan relief program are the following:

  • Those not controlled by Fannie Mae or Freddie Mac
  • Those with loans under 80% of the value of the home
  • Second home (non-primary residence)
  • Investor-owned homes.

 

 

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