President Barack Obama's Making Home Affordable program is intended to rescue the nation's failing housing market. It has two separate but closely linked components.
The Home Affordable Refinance and the Home Affordable Modification plans are both designed to help struggling homeowners by making their monthly payments more affordable through loan restructuring.
Making Home Affordable Plan
The following questions define the requirements of each program.
Home Affordable Refinance What does the program do for homeowners?
The Home Affordable Refinance program allows borrowers to refinance into a 30- or 15-year fixed rate loan even if they owe slightly more on their mortgages than their homes are worth.
The new rate will be based on market mortgage rates at the time of the refinance, as well as associated points and fees determined by the lender.
Who qualifies for a refinance under the new plan?
Homeowners with a conforming loan owned or securitized by Fannie Mae or Freddie Mac. The first mortgage on the home cannot exceed 105 percent of the current market value of the property.
Homeowners must be current on their mortgage payments, and the mortgage must have been originated before Jan. 1, 2009.
Borrowers must live in the home in question (which must be a one- to four-unit property) and it must be their primary residence. They also must have income sufficient to support payments under the new loan terms.
2009 conforming loan limits
Conforming loans limits for 2009 in most areas of the United States are as follows:
- Single-family homes: $417,000.
- Two-unit properties: $533,850.
- Three-unit properties: $645,300.
- Four-unit properties: $801,950.
Loan limits may vary in "high cost" housing markets. The Federal Housing Finance Agency has more information
about such limits as well as a list of specific limits
for various high-cost markets.
Who doesn't qualify?
Borrowers who are currently delinquent on their mortgage payments do not qualify for the Home Affordable Refinance program.
Others who do not qualify include:
- Borrowers who have loans that are not owned by Fannie Mae or Freddie Mac. This includes homeowners with jumbo loans.
- Borrowers whose first mortgage on the home exceeds 105 percent of the current market value of the property.
- Borrowers who do not make enough income to afford the new mortgage payments.
How can I find out if I meet the qualifications?
To find out if your loan is owned by Fannie Mae, call (800) 7FANNIE or visit Fannie Mae's Web site. To find out if your loan is owned by Freddie Mac, call (800) FREDDIE or visit Freddie Mac's Web site.
You can also call your loan servicer to find out if your loan is eligible for the program.
Are there costs and fees associated with this program?
Borrowers may be required to pay lender fees, points and other closing costs.
What documents will I need to prove I can afford the new mortgage debt?
Borrowers need to provide a signed Form 4506-T -- "Request for Transcript of Tax Return" -- and a copy of the most recent tax return on file for all borrowers.
Borrowers also need to provide their two most recent pay stubs. Self-employed borrowers' income will be verified through third-party documentation that provides reliable evidence of income (bank deposits, freelance paychecks, etc.)