The Making Home Affordable Refinance Program
President Obama’s Mortgage Loan Modification and Refinancing Plan
Oct 2, 2009
As part of the Financial Stability Plan, the Obama Administration created The Making Home Affordable Refinance Program. The program was created to help struggling Americans stay in their homes and avoid foreclosure. There are two parts to the program, the Home Affordable Refinance and the Home Affordable Modification.
Home Affordable Refinance Program (HARP)
HARP is part of the program that was developed for homeowners who aren’t able to take advantage of lower interest rates because if decreasing home values. This part of the program is for credit worthy individuals that are not behind in their current mortgage payments. HARP has a fixed interest rate over the life of the loan and could be especially beneficial for homeowner’s with an adjustable mortgage rate.
HARP Mortgage Refinancing Qualifications
- The current mortgage loan must be owned or guaranteed by Freddie Mac or Fannie May
- The amount still outstanding on the first mortgage cannot be more than 125% of the current market value
- The current mortgage payments must be current and no late payments over 30 days in the last 12 months
- The homeowner(s) must be able to make the refinanced payments (income to debt)
- The new mortgage needs to improve the stability of the loan
Home Affordable Modification Program (HAMP)
HAMP is part of the program that was developed for homeowners who can’t make their monthly mortgage loan payments. Unlike HARP, if the homeowner has missed payments on their mortgage, they may qualify for the modification program. In order to qualify for HAMP, the home loan does not have to be owned or guaranteed by Freddie Mac or Fannie May.
HAMP Mortgage Modification Qualifications
- Must be the occupant of the home
- The amount still owed on the mortgage for a single unit home must be less than $729,750 (multiple units vary)
- The homeowner(s) monthly gross income must be greater than 31% of the modified loans total monthly payments (including property tax and insurance)
- The current mortgage was started on or before January 1, 2009
- Must have a documented financial hardship that will not allow the homeowner to make their current loan payments
Even though a mortgage owned or guaranteed by Freddie Mac or Fannie May is not a requirement for HAMP, if the current mortgage is owned or guaranteed by Freddie Mac or Fannie May, the homeowner’s loan provider is mandated to participate. The interest rate for HAMP can go as low as 2% for a short term, but the interest rate may increase over time and a balloon payment may become due.
Source:
makinghomeaffordable.gov
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