Making Home Affordable will offer assistance to as many as 7 to 9 million homeowners, making their mortgages more affordable and helping to prevent the destructive impact of foreclosures on families, communities and the national economy.

The Home Affordable Refinance program will be available to 4 to 5 million homeowners who have a solid payment history on an existing mortgage owned by Fannie Mae or Freddie Mac. Normally, these borrowers would be unable to refinance because their homes have lost value, pushing their current loan-to-value ratios above 80%. Under the Home Affordable Refinance program, many of them will now be eligible to refinance their loan to take advantage of today’s lower mortgage rates or to refinance an adjustable-rate mortgage into a more stable mortgage, such as a 30-year fixed rate loan.

GSE lenders and servicers already have much of the borrower’s information on file, so documentation requirements are not likely to be burdensome. In addition, in some cases an appraisal will not be necessary. This flexibility will make the refinance quicker and less costly for both borrowers and lenders. The Home Affordable Refinance program ends in June 2010.

The Home Affordable Modification program will help up to 3 to 4 million at-risk homeowners avoid foreclosure by reducing monthly mortgage payments. Working with the banking and credit union regulators, the FHA, the VA, the USDA and the Federal Housing Finance Agency, the Treasury Department today announced program guidelines that are expected to become standard industry practice in pursuing affordable and sustainable mortgage modifications. This program will work in tandem with an expanded and improved Hope for Homeowners program.

Home Affordable RefinanceMaking Home Affordable Program for Freddie Mac-owned Mortgages.

If you’re current on your mortgage payments but unable to refinance because you owe more on your mortgage than your home is currently worth, you may be able to refinance to a lower or more stable rate through a Home Affordable Refinance, part of the federal Making Home Affordable program.
A Home Affordable Refinance on a Freddie Mac-owned mortgage can help you obtain a monthly payment you can afford, and result in one of the following:
 

•    A reduction in your interest rate
•    A fixed-rate mortgage in place of an adjustable-rate, interest-only or balloon/reset mortgage
•    A reduction in the term of your mortgage (i.e., from 40 years to 30 years)

How Can I Qualify?

If your mortgage is owned by Freddie Mac, you may be able to obtain a refinance through this program if:
•    You are current on your mortgage payments (and you haven’t been over 30 days late with a mortgage payment in the past 12 months)
•    Your current mortgage is at least three months old
•    Your first mortgage is less than or equal to 125 percent of the current market value of your home

You may be eligible for a Home Affordable Refinance on your Freddie Mac-owned mortgage if the property you’re trying to refinance is:
•    One-to-four units, and you’re currently living in one of the units as your primary residence
•    A one unit second home, such as a vacation home
•    A one-to-four unit investment property

Home Affordable ModificationMaking Home Affordable Program

If you’re a homeowner who is behind in your mortgage payments, in the foreclosure process, or is current on your payments but are about to default as a result of a recently experienced hardship, you may be able to modify your loan to a lower rate through the Home Affordable Modification Program.
A Home Affordable Modification can help you by bringing your monthly mortgage payment to no less than 31 percent of your gross (before tax) monthly household income by:
•    Reducing your interest rate, and if necessary
•    Extending your loan term (i.e., from 30 years to 40 years), and possibly
•    Forbearing (deferring) a portion of the principal amount you owe until the loan is paid off, and waiving the interest on the deferred amount

How Can I Qualify?

You may be able to obtain a Home Affordable Modification through this program if:
•    You’re late on your current mortgage payment
•    You’re currently making your mortgage payments on time, but your mortgage is no longer affordable because of a hardship that you can document
•    You spend more than 31 percent of your pre-tax income on your mortgage payment (including principal, interest, taxes, insurance, and homeowners association dues)
•    You took out your mortgage on or before January 1, 2009
•    Your mortgage is for a 1- to 4-unit property, and you’re currently living in one of the units as your primary residence
Homeowners with mortgages that are not owned by Freddie Mac or Fannie Mae may be eligible for a Home Affordable Modification if your mortgage lender, also called “servicer,” has voluntarily agreed to participate in the program. 

What to Expect

The process of obtaining a Home Affordable Modification may require a lot of back and forth between you and your lender – so please try to be patient and return calls and/or documents quickly.   
•    If you’re late on your mortgage payment, you may receive a letter from your lender offering help. Follow the instructions, including gathering and completing the materials they sent you.

These materials could include a cover letter explaining the program and requesting certain income documentation, a Hardship Affidavit, tax returns, and IRS Form 4506-T, authorizing the lender to pull your tax transcript, a borrower financial information document, and other documentation.
•    If you’re eligible, your lender will offer you a three-month trial period at a new mortgage payment amount. To successfully complete this trial period, you will need to make three monthly payments on time at the new payment amount.
•    Once you’ve successfully completed the three-month trial period, your mortgage lender will permanently modify your mortgage.

What If I Don’t Receive a Notice from my Lender?

Even if you haven’t been contacted by your mortgage lender, you may still be eligible for a modification under the program. For instance, if you’re current on your mortgage payments but you can prove a hardship (such as divorce, job loss, reduction in salary, etc.) that will make it difficult for you to continue to make your monthly payments in the future, you may be eligible.

 
What If I Can't Qualify?

If you don’t qualify for a Home Affordable Modification, there are several other options that may be available for you to help you avoid foreclosure.