The full details of President Obama’s Making Home Affordable plan were released this morning. Millions of homeowners will likely visit the government’s new Web site, financialstability.gov, to find out if they qualify for a Home Affordable Refinance Program (HARP) loan under the plan.
Who Qualifies for a HARP loan:
- If the home you want to refinance is your primary residence, and
- The loan on your home is controlled by Fannie Mae or Freddie Mac (it must be a conforming loan — you can call Fannie at 1-800-7FANNIE and Freddie at 1-800-FREDDIE or submit online forms with Fannie and Freddie), and
- If you’re current on your mortgage payments (meaning you haven’t been more than 30 days late on your mortgage in the last 12 months), and
- If you have sufficient income to support a new mortgage…
.. then, you might qualify for a HARP loan.
It gets a little more complicated, though: You can’t be too far underwater on your mortgage (owe more than the home’s market value) to qualify for the refinance. You can owe between 80-105% of the current value of your home, but no higher than 105%. (This plan assumes that if you owe less than 80% of your home’s value, you probably can refinance without government assistance.) Visit Zillow.com to get an idea of your home value.
Zillow has used its Q4 Real Estate Market Reports to estimate that about one-quarter of Americans with mortgages could be eligible. That number is probably smaller than our estimate, though, because we can’t see who has Fannie/Freddie-backed mortgages.
What Do I Need to Provide?
If you think you might qualify for a HARP loan, you’ll need to give the following documents to your mortgage lender:
- Your monthly gross (before taxes) income of your household, including recent pay stubs.
- Your last income tax return.
- Information about any second mortgage on the house (you can only refinance your first mortgage under the plan, but having a second mortgage won’t automatically exclude you).
- Account balances and minimum monthly payments due on all your credit cards.
- Account balances and minimum monthly payments for all your other debts, like student loans or car loans.
How Will They Decide What My Home is Worth Today?
Official word on how your home will be valued for the refinance portion of the Obama housing plan hasn’t been released yet. It’s possible that lenders are expected to use their traditional procedures, but it hasn’t been spelled out in the documents. Justin McHood has some ideas how they will arrive at 105%.
When Will This Help Me?
When it comes to refinancing under the Making Home Affordable plan, patience is going to be a virtue. With so many homeowners in some sort of distress (one in six American homeowners has negative equity, and foreclosures and home values fell 11.6% nationwide last year), there is likely to be a flood of applications and queries for lenders.
What If I Don’t Qualify to Refinance?
Don’t lose heart — you might qualify for a loan modification under the plan, which is called Home Affordable Modification Program (HAMP).
Additional resources:
See what others are saying in Zillow Advice:
- Guidance from the Government: “Making Home Affordable Refinance and Modification Options”
- What Benefit is Refinancing Under Stimulus Plan?
- Loan Modifications
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Comments
10 Comments so far
Obama Home Mortgage Rescue Plan part 5 | San Francisco Peninsula Real Estate
[...] Katie Curmutte, Zillow on Mortgages Unzipped blog provides lots of details on the plan. [...]
Doris Bridges
My name is Doris Bridges and I work in 2007 and was make 13.00 an hours. But in 2008 I was making 6.55 an Hours. I can’t make the loans note now.
Your Bank Connection
The Making Home Affordable Plan should provide some borrowers mortgages with interest rates as low as 2 percent and there are also incentives that may pay down principal in some cases. There are two programs — Home Affordable Refinance and Home Affordable Modification.
Making Home Affordable offers help to borrowers who are already behind on their mortgage payments or who are struggling to keep their loans current. By providing mortgage servicers with financial incentives to modify existing first mortgages, the Treasury hopes to help as many as 3 to 4 million homeowners avoid foreclosure regardless of who owns or services the mortgage.
http://www.yourbankconnection.com/making home affordable.htm
Katie Curnutte
Doris,
You should contact your lender — look on the coupon book and find the phone number of whatever company you pay every month. Maybe you qualify for a loan modification. Just tell them you’re interested in a modification under the Home Affordable Plan. Good luck.
Katie
Keith Balfourd
I have a first mortgage with a balance of $167K on a home valued now at $319K…. was $365 when we took out a second. This second is outstanding for $108K. Credit score of 780 and have kept up on all payments, but now need to refinance (combine under a better rate) to stay above water. Traditional refinance out of play due to principle to asset ratio a non-qualifier.
Will either the HAR or HAM help me?
al diro
This attempt at repairing our dying real estate market is just smoke. I have been working loan modifications, 21st Century Legal Services, since 2008 in the Los Angels Riverside-San Bernardino region. The lenders are so slow to modify. It’s like trying to take away a bone from your neighbors dog.
Go to YouTube.com enter in search ‘nightline maxine’
Watch Congresswoman Maxine waters attempt 3 loan mods w/o success as ABC Nightline TV records it.
Amazing!
We do succeed in getting loan mods done, but they are a lot of hard work and take a lot of time.
Today the local news site PE.com, posted the latest stats on local home value. Over 379,000 (44.8%) properties in Riverside-San Bernardino-Ontario are upside down! We are only 2nd to the state of Nevada in America.
In 2008, California led the nation with 530,000+ homes in foreclosure, against the national total of 2.3 million home. These numbers are expected to double in 2009.
This is the ‘Katrina’ mess times 1 million. This a a major, major problem that continues to grow and is estimated to be near $10 trillion dollars worth of bad loans!
Watch: CNBC TV special ‘House of Cards”
The lenders who created this PONZI scheme, used fraud based appraisals to inflate these loans. They need to write down these mortgages to present values, today. The prediction for 2009 is a further 30%-50% reduction in home value here. Home prices are in free fall.
Go to CBS News video for more info:
http://www.cbsnews.com/sections/i_video/main500251.shtml?id=3940904n
I see on a daily basis homeowners upside down $200,000+. The only way to fix this is a national emergency bank takeover with supervised writedowns to present value. These loan values were a lenders lie to begin with.
America’s home real estate world is like a person dying from gangrene in his leg. We HAVE TO CUT THE LEG OFF TO SAVE THE PATIENT.
If they don’t write down these mortgages ASAP, a total real estate economy collapse is next.
What happened?
The mortgage salesman suckered the homeowner into thinking they could refi forever (LOTTO fever) while he took home his fat commisions, state took taxes, ad company made $, exec’s made bonus, over and over with refi’s until the bubble burst.
Now, 12 million homeowners can’t make a house payment. Unemployment numbers are going through the roof. Up to 25% of the unemployed will be doomed for foreclosure.
Then, when President Obama ends the Iraq war, a new slam will hit our economy like the 1970’s when the Vietnam war ended. War factories will close and thousands of GI’s will be looking for work that isn’t there.
For added measure let’s mix in the ever increasing number of aging baby boomers seeking medical care they can’t afford, further dragging down our health care system, the next bailout candidate.
So Mr Lender either write the home loans down or die!
Al Diro
21st Century Legal Services
Modify Your Loan with a Home Affordable Modification | Mortgages Unzipped
[...] you can’t qualify to refinance under President Obama’s Making Home Affordable plan, you might still have a chance to lower your monthly payments by doing a loan modification. This [...]
Alan Chan
I actually have a similar question as blogger, Keith Balfourd.
I bought my primary resident in 2005 using the 80-15-5 financing strategy to avoid PMI. I bought a brand new spec home for 160K. Since then, I have added the lawn/landscaping, a fence in the backyard, and finished the basement. Now, because of the housing market, I am guessing that it is still worth between 140-160K. As of today, I still owe about 122K on the first mortgage and about 20K on my second mortgage.
Late last year, I tried to combine the mortgages and refinance it, but they told me that I don’t qualify because my LTV is too low (Best case - 142K/160K = 89%).
Will either the HAM and the HAR program benefit me now? Please help!
Thanks.
Alan
Scott
Under this plan, you can get help if you are not making your payments. You can also get help if you are not severely underwater on the mortgage, and therefore not in any serious trouble. What about those of us in between? Those of us who are responsible with making our payments, but are beyond the 105% mark and unable to refinance or sell our home. It hardly seems fair… If something isn’t done to help the people in this category, this problem is just going to continue to get worse in my opinion.
Kathryn Berry
These plans do not help people like myself and my husband. A modification we would have to be 3 mo’s del. and ruin any credit we have left and still the mod under this plan (they will include my u.e. which will run out) we can only get our mortgage down about 300 a month and that is not going to help our situation. Since my husband will have to retire in a few yrs. We bought 2 1/2 yrs. ago and both of us had good jobs and thought we had gotten a decent deal and would be able to sell and get a townhouse perhaps and have at least 50k equity in this home. We paid $235k and since the home was a fixer paid about 20k to get it where it is decent for us, and at that time was appraised at 300k. We are in a.v. ca and we recently found out the worth of our home is 108k so we are over 100k upside down. I lost my job in July 09 and am on u.e., I am 50 yrs old and do not spk spanish and so haven’t found work. My husband is 60yrs. so we do not have 10-15yrs for the economy to turn around and are at risk of losing our home and I am very worried. We have pets and need to be able to buy but with this home on us do not know if we could get a lender to qualify us even for just perhaps a 50k loan, I am starting to get worried there isn’t a way out of this mess and of course like others I am sure are getting very depressed.