The Obama administration’s plan created to help millions of homeowners refinance or modify their mortgages is expected to cause the flooding of requests from troubled borrowers in the loan refinancing or modification. About 9 million loans are expected to be renegotiated under the program.

The Obama administration revealed "Making Home Affordable" program March 4. This has two components. One of which is the "Home Affordable Modification Program," that will provide $75 billion in incentives intended to help up to 4 million homeowners in their loan modifications or short sales with their loan servicers.

The other component of the program is the "Home Affordable Refinance Program," which is an initiative to refinance up to 5 million loans owned or guaranteed by Fannie Mae and Freddie Mac.

Refinancing:

Many homeowners pay their mortgages on time but are not able to refinance to take advantage of today’s lower mortgage rates perhaps due to a decrease in the value of their home. A Home Affordable Refinance will help borrowers whose loans are held by Fannie Mae or Freddie Mac refinance into a more affordable mortgage.

Qualifications:

If you are a homeowner who is current on your mortgage payments but unable to refinance to a lower interest rate because your home value has decreased, you may be able to refinance.

·         Is your home your primary residence?

·         Do you have a Fannie Mae or Freddie Mac loan? If you don’t know contact:

Fannie Mae, 1-800-7FANNIE (8am to 8pm EST).  www.fanniemae.com/homeaffordable

Freddie Mac , 1-800-FREDDIE (8am to 8pm EST). www.freddiemac.com/avoidforeclosure/

·         Are you current on your mortgage payments?

“Current” means that you haven’t been more than 30-days late on your mortgage payment in the last 12 months.

·         Do you believe that the amount you owe on your first mortgage is about the same or less than the current value of your house?

If you answered yes to all the four questions, you are eligible for a Home Affordable Refinance. Next step is to gather the following information you will provide your lender and it shall be as follows:

·         Information about the monthly gross (before tax) income of your household, including recent pay stubs if you receive them or documentation of income you receive from other sources.

·         Your most recent income tax return.

·         Information about any second mortgage on the house.

·         Account balances and minimum monthly payments due on all of your credit cards.

·         Account balances and monthly payments on all your other debts such as student loans and car loans.

After you have this information, you should call your mortgage servicer or lender (the organization to whom you make your monthly mortgage payments) and ask about the Home Affordable Refinance application process. The number is on your monthly mortgage bill or coupon book.

Modification: Many homeowners are struggling to make their monthly mortgage payments either because their interest rate has increased or they have less income. A Home Affordable Modification will provide them with mortgage payments they can afford.

Qualitfications:

If you can no longer afford to make your monthly loan payments, either because your interest rate has increased or you have less income or you are experiencing a hardship that has increased your expenses (like medical bills), you may qualify for a loan modification to make your monthly mortgage payment more affordable. Millions of borrowers who are current, but having difficulty making their payments and borrowers who have already missed one or more payments may be eligible.

·         Do I qualify for a Home Affordable Modification? Answer these questions:

·         Is your home your primary residence?

·         Is the amount you owe on your first mortgage equal to or less than $729,750?

·         Are you having trouble paying your mortgage? For example, have you had a significant increase in your mortgage payment OR reduction in your income since you got your current loan OR have you suffered a hardship that has increased your expenses (like medical bills)?

·         Did you get your current mortgage before January 1, 2009?

If you answered yes to all the five questions, you are eligible for a Home Affordable Modification. Next step is to gather the following information you will provide your lender and it shall be as follows:

·         A letter describing the circumstances that caused your income to be reduced or expenses to be increased (job loss, divorce, illness, etc.).

After you have this information, you should call your mortgage servicer and ask to be considered for a Home Affordable Modification.

Fannie Mae and Freddie Mac have set up Web sites and toll-free hotlines to help borrowers determine whether their existing loan is owned or guaranteed by Fannie or Freddie. Together with this is the online applications service through HOPE NOW coalition.

Source: www.Financial Stability.gov