With the Homeowner Affordability and Stability Plan (HASP), also known as the Making Home Affordable Plan, getting under way we are starting to get a lot of questions on how the program works.
How does this plan work?
Making Home Affordable has two primary initiatives:
- The refinance program allows eligible borrowers with Fannie Mae and Freddie mac loans to refinance their first mortgages at Loan to Values(LTVs) up to 105%.
- The loan modification plan allows eligible borrowers to reduce their monthly mortgage payments to affordable and sustainable levels to ensure they can stay in their homes and avoid foreclosure.
Who will NOT qualify for this program?
- Refinancing: Borrowers who do not have a Fannie or Freddie mortgage, or who have not been current on their payments in the past twelve months, Fannie does allow one 30 day late payment in the preceding 12 months but Freddie Mac does not permit any late payments.
- Modifications: If you have a mortgage greater than $729,750 (or higher limits for 2-4 unit properties), the loan originated after 1/1/09, the loan is not a first lien loan, the home is not the primary residence, or you are a current borrower, you are not in imminent default.
For the refinancing program, does the property have to have to be an owner occupied primary residence?
No. Non-owner occupied and second homes are eligible under the Fannie Mae and Freddie mac refinance programs.
What options are available to current borrowers who are experiencing financial difficulties?
The Making Home Affordable plan includes a refinance option and a loan modification option. Borrowers will be assessed to determine the right option fro them. Current borrowers need to be in imminent default in order to qualify for a loan modification, which means changes in circumstances or facing mortgage payment increases that create hardship.
What tips do you suggest for borrowers considering a refinance with this program?
Borrowers will have the opportunity to refinance if they have a conforming loan owned, guaranteed or securitized by Freddie Mac or Fannie Mae. There are a number of factors to consider in order to ensure that refinancing is the right decision for the consumer:
- Equity - Homeowners need to have an understanding of their equity position in their home to refinance. Equity is the difference between the home's value and the amount owed in mortgage debt. With the new refinance program, homeowners can refinance up to 105% of their home's current value.
- Property Values- To self asses their equity position, homeowners should have a good idea of what the home is worth in today's market, based upon sale of similar properties in the neighborhood.
- Affordability- Before starting the refinance process, consider how a new loan payment will affect overall financial health and goals. Free online calculators can help determine what a new payment might look like. Add that to the total paid each month to other debt payments to determine total debt. A lender will take this ratio, called a debt-to-income ratio into consideration during the approval process.
Hope that answers some of your questions. I am sure there are a lot more out there, let us hear from you.
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