The Making Home Affordable initiative, recently signed by President Obama, is intended to offer mortgage relief for up to 9 million borrowers, and to help reduce the number of home foreclosures.
The initiative has two separate program components; each component has specific qualification criteria. Both programs are limited to borrowers’ primary residences, borrowers who owe no more than $729,750 and borrowers who fully document their incomes.
Aimed at homeowners whose property has lost value as housing prices have declined, this program is open only to borrowers with conforming loans sold to Fannie Mae or Freddie Mac. It waives the requirement that the borrower must have at least 20% equity in their home in order to refinance. The program does not reduce the principal of the loan, but it allows the borrower to refinance that principal up to 105% of the current value.
This program targets borrowers whose mortgage payments have become unaffordable either because of a hardship, such as job loss or illness, or because their adjustable rate mortgage interest rate has reset to a higher rate. The government is providing cash payments and financial subsidies to help lenders lower monthly payments to no more than 31% of these borrowers’ gross monthly household income. It allows for reduction in interest rates, extension of repayment terms and participation in other relief plans, all of which are entered into for a set period of time.
If you meet all of the above qualifications and would like more information or have any questions, please contact Marissa Bonilla at (877) MY-LAPFCU x 384.
