Loan Modification and Refinance options

The Making Home Affordable plan has two components.  A refinance component and and  loan modification component.

The plans are voluntary but the government is offer the servicers and investors money to participate. Once the investor or servicers agrees to participate it seems

they will have to offer the modifications to eligible home owners.

Home Affordable Modifications

1. Loan modification can begin immediately

2. Owner occupant in 1-4 unit property, uppaid principle balance equal to $729,750. (for one unit)

3. Loan originated before 2009

4.   Have a mortgage payment that is above a 31% debt to income ratio.  (debts are specifically defined to include – mortgage/loan payments, taxes, homeowner fees and insurance)

5. A change in income or expenses which make the old payment no longer affordable.

6. Borrowers can be CURRENT. A borrower does need to be at risk of imminent default and will be screened.

There is a trial modification period which borrowers must complete.

There is the possiblity for principle reduction.

There is also the possiblity of a pay off of $1000 to the junior loan.

The new Making Home Affordable Refinance Plan

1. Conforming Loans owned or securitized by Freddie Mac or Fannie Mae.  Most loan types are available for modification including, prime, subprime and adjustable.
We would expect other loans to modify in a similar manner.

2. Refinance Program starts immediately

3. Owner occupied, sufficient income to support new payments, the first mortgage can not exceed 105% of the current market value of the property.

4. If two loans junior liens must agree to subordinate to new senior loan.

5. Borrower must be current.


Note in 2020…  we will see if this still works going forward…