On Wednesday, February 18, 2009, President Obama announced his new Homeowner Affordability and Stability Plan to help troubled homeowners avoid foreclosure.

For a free Homeowner’s Guide to Making Home Affordable - click here.

This plan will offer assistance up to 9 million homeowners and applies only to primary residences.

The first component of the plan allows homeowners who are current to refinance an existing Fannie Mae or Freddie Mac conforming loan with a loan-to-value ratio up to 105 percent.

The second component addresses homeowners who are at risk of foreclosure on their mortgages, but they do not have to be delinquent.

The government will work with the lenders to ensure that monthly mortgages do not exceed 31 percent debt-to-income ratio.

Furthermore, the government will seek to create clear and consistent guidelines for loan modifications.

The details of the Homeowner Affordability and Stability Plan were released on Wednesday, March 4, with the introduction of the Making Home Affordable plan.  Please look at the appropriate charts below to read about the summary of these new programs.

The plan has two primary goals:

1.To help homeowners in existing Fannie Mae or Freddie Mac loans that are current on their mortgage payments to refinance and take advantage of today’s lower interest rates.  Many of these homeowners are unable to refinance because of lost appreciation in their homes due to the continuing decline in home prices.  These homeowners still have equity in their home, just not the necessary 20% to get a refinance.  Under the Administration’s plan, Fannie and Freddie will be allowed to refinance qualified homeowners up to a 105 percent loan-to-value of the current value of the home.

2. To help homeowners who are at risk of foreclosure.The Administration is offering loan servicers and investors government assistance to help offset the cost of modifying qualified homeowners into affordable mortgages that will allow them to keep their homes. This may be done by reducing the mortgage interest rate, extending the term of the loan, principal forbearance, and/or principal cramdown. This program is voluntary and the servicers must agree to contracts with the Treasury to participate.

· In addition, the Government warns homeowners to beware of foreclosure rescue scams:
There should never be a fee charged for information or assistance regarding the Making Home Affordable Program.
Beware of anyone who says they can “save” your home if you sign or transfer over the deed to your home. Do not sign over the deed to your property to any organization or individual unless you are working directly with your mortgage company to forgive your debt.
Never make your mortgage payment to anyone other than your mortgage company without their approval.

To find out if you qualify for either the Making Home Affordable Refinancing Program or the Loan Modification Program please click on the appropriate link below:

Find Out If You Qualify For the Making Home Affordable Refinance
Find Out if You Qualify For the Home Affordable Modification

The following information is intended for homeowners seeking information on existing mortgage workout programs.  In general, the loan modification programs on the chart (see link below) and consumer information sheets (see links below) are intended for primary residences only.

Click here for a Lender Comparison Chart (3/24/09) on existing mortgage workout programs (revised 3/24/09). The chart is a compilation of programs offered by the larger lenders and government entities. If a specific lender or loan servicer is not on the chart, homeowners may wish to contact the lender or loan servicer to determine if a workout program is available.

Homeowners having difficulty meeting their mortgage obligation or interested in finding out more about a loan modification program should start by contacting their lender. Prior to calling a lender or loan servicer, homeowners should have the following information available:

^. Loan number

^. Income information and documentation

^. Most recent mortgage statement

^. Bank statements

^. Letter demonstrating financial hardship

Mortgage loan modifications typically are handled on a case-by-case basis.

Information provided by C.A.R. (California Assn of Realtors)