Making Home Affordable Modification Program
By Lisa Phillips
December 2009
By Lisa Phillips
December 2009
If you do not meet all of the qualifications, contact your servicer directly, you may still be eligible.
Unfortunately, many servicers did not know how to apply the program to their loans until July
2009. It has been a slow process but do not get discouraged keep pursuing this option.
Is my Lender Participating?
Keep in mind not all servicers offer the Making Home Affordable Program. Participation is not
mandatory. Only servicers of loans owned or guaranteed by Fannie Mae or Freddie Mac are
required to participate in the program. You can find a current list of loan servicers participating in
the program on the makinghomeaffordable.com website. More and more servicers are taking part
in the program as there are substantial incentives available for participation.
How the Program Works
In order to make your home affordable, the borrower’s interest rate will be reduced to a point
sufficient to get the modified payment to equal 31% of the borrower’s gross monthly payment.
This means that a loan servicer can lower an interest rate as low as 2% if necessary to achieve
an affordable payment. As stated above, the affordable payment should be 31% of the borrower’
s gross income.
If the loan servicer is unable to get the mortgage payments to no more than 31% of the gross
monthly income, the servicer may extend your payment terms up to 40 years. The servicer may
also defer a portion of the principal amount you owe until the maturity of the loan. You will still
owe the principal; however, the payment will be deferred until a later date.
The loan servicer can also do a principal reduction in order to make the payments more
affordable. Unfortunately this rarely happens and is solely up to the loan servicer.
Once you get approved for the Making Home Affordable Loan Modification there will be a trial
period of 3 months. Basically the borrower will have to make three on-time payments in order for
the modification to become permanent. Borrowers who are unable to make three payments by
the end of the trial period are not eligible for a modification under this program but may be able
to pursue other options offered by your servicer.
As of November 30, 2009, the Treasury Department reported an increase in trial and permanent
loan modifications through the program to 728,408 compared with 650,994 at the end of
October. For more information visit www.MakingHomeAffordable.gov to get detailed information
about these programs along with tools to determine eligibility for a modification or a refinance
under the program.
Unfortunately, many servicers did not know how to apply the program to their loans until July
2009. It has been a slow process but do not get discouraged keep pursuing this option.
Is my Lender Participating?
Keep in mind not all servicers offer the Making Home Affordable Program. Participation is not
mandatory. Only servicers of loans owned or guaranteed by Fannie Mae or Freddie Mac are
required to participate in the program. You can find a current list of loan servicers participating in
the program on the makinghomeaffordable.com website. More and more servicers are taking part
in the program as there are substantial incentives available for participation.
How the Program Works
In order to make your home affordable, the borrower’s interest rate will be reduced to a point
sufficient to get the modified payment to equal 31% of the borrower’s gross monthly payment.
This means that a loan servicer can lower an interest rate as low as 2% if necessary to achieve
an affordable payment. As stated above, the affordable payment should be 31% of the borrower’
s gross income.
If the loan servicer is unable to get the mortgage payments to no more than 31% of the gross
monthly income, the servicer may extend your payment terms up to 40 years. The servicer may
also defer a portion of the principal amount you owe until the maturity of the loan. You will still
owe the principal; however, the payment will be deferred until a later date.
The loan servicer can also do a principal reduction in order to make the payments more
affordable. Unfortunately this rarely happens and is solely up to the loan servicer.
Once you get approved for the Making Home Affordable Loan Modification there will be a trial
period of 3 months. Basically the borrower will have to make three on-time payments in order for
the modification to become permanent. Borrowers who are unable to make three payments by
the end of the trial period are not eligible for a modification under this program but may be able
to pursue other options offered by your servicer.
As of November 30, 2009, the Treasury Department reported an increase in trial and permanent
loan modifications through the program to 728,408 compared with 650,994 at the end of
October. For more information visit www.MakingHomeAffordable.gov to get detailed information
about these programs along with tools to determine eligibility for a modification or a refinance
under the program.
The Obama Administration’s Making Home Affordable Modification Program was introduced in
March 2009. The Program is to address the growing foreclosure crisis and help stabilize the
economy. The program is projected to offer assistance to as many as 7 to 9 million struggling
homeowners. There are two options available under the Making Home Affordable Program:
March 2009. The Program is to address the growing foreclosure crisis and help stabilize the
economy. The program is projected to offer assistance to as many as 7 to 9 million struggling
homeowners. There are two options available under the Making Home Affordable Program:
1. Home Affordable Refinance
This program is available for
homeowners who are current on
their mortgage but unable to
refinance to the lower interest
rates offered in today’s market.
The home affordable refinance
option will help up to 4 to 5 million
homeowners whose loans are
owned or guaranteed by Fannie
Mae or Freddie Mac. It gives
homeowners an opportunity to
refinance into more affordable
monthly payments.
This program is available for
homeowners who are current on
their mortgage but unable to
refinance to the lower interest
rates offered in today’s market.
The home affordable refinance
option will help up to 4 to 5 million
homeowners whose loans are
owned or guaranteed by Fannie
Mae or Freddie Mac. It gives
homeowners an opportunity to
refinance into more affordable
monthly payments.
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2. Home Affordable Modification
This program is different from the traditional loan modification
because the goal of the program is to reduce the monthly mortgage
payment to more affordable levels for the homeowner. Traditional
loan modification programs do not necessarily lower a homeowner’s
monthly mortgage payment. In fact, often times the homeowner’s
monthly mortgage payment increases. Qualifications for the Home
Affordable Modification:
This program is different from the traditional loan modification
because the goal of the program is to reduce the monthly mortgage
payment to more affordable levels for the homeowner. Traditional
loan modification programs do not necessarily lower a homeowner’s
monthly mortgage payment. In fact, often times the homeowner’s
monthly mortgage payment increases. Qualifications for the Home
Affordable Modification:
- Be the owner-occupant of a one to four unit home;
- Have an unpaid principal balance that is equal to or less than:
- 1 Unit: $729,750
- 2 Units: $934,200
- 3 Units: $1,129,250
- 4 Units: $1,403,400;
- Have a first lien mortgage that was originated on or before 1/1/2009;
- Have a monthly mortgage payment (including taxes, insurance, and
home owners association dues) greater than 31 percent of your
monthly gross (pre-tax) income; and - Have a mortgage payment that is not affordable due to a financial
hardship that can be documented.
Related Topics:
- FHA Mortgage Loans, Basic Features and Loan Limits
- The Benefits of Fixed Rate Mortgages
- VA Homes Loans
- Hard Money Mortgage Loans
- Adjustable Rate Mortgage Loans
- Interest only Mortgage Loans
- Benefits of making Bi-Weekly Mortgage Payments
- Options to Foreclosure
- Stop Foreclosure with Forbearance
- How to Request a Mortgage Loan Modification
- Downpayment Assistance Listed by State