President Obama announced details about his administration’s $75 billion plan to refinance and modify millions of mortgages; the plan is a portion of the much larger Tarp II plan briefly outlined by Timothy Geithner during his address to the nation on Tuesday February 10, 2008.
If you are a homeowner in trouble of losing your home to foreclosure, or a homeowner that has not missed a payment, but would like to refinance to a lower interest rate, you can officially start calling lenders and asking for a loan modification. The money used for this program comes from the $700 billion approved as part of Tarp I in late 2008.
The $75 billion dollar project deemed Making Home Affordable, pledges to make homeownership more affordable for as many as 9 million Americans. The program uses a combination of government subsidies and incentives (for servicers, lenders and borrowers) in an effort to reduce principals and lower interest rates on millions of American loans. There are two portions of the new Making Home Affordable plan outlined by the Obama administration.
Photo Credit: LoanWorkout.org
Home Affordable Refinance (For Current Homeowners)
The Home Affordable Refinance portion of this plan helps homeowners that have lost value in their home, but are still current on their mortgage payments. It gives borrowers with conforming home loans backed by Freddie Mac and Fannie Mae the ability to refinance their homes with little or no equity. Those of you that could not refinance your mortgage into a lower interest rate loan, because you lacked the necessary equity, may now be able to receive a loan for up to 105% of your home’s market value.
Do You Qualify for the Home Affordable Refinance Program
these qualifications were found on www.financialstability.gov
• Is your home your primary residence?
• Do you have a Fannie Mae or Freddie Mac loan? If you don’t know contact:
• Fannie Mae,
- 1-800-7FANNIE (8am to 8pm EST).
• Freddie Mac
- 1-800-FREDDIE (8am to 8pm EST)
• Are you current on your mortgage payments?
• “Current” means that you haven’t been more than 30-days late on your mortgage payment in the last 12 months.
• Do you believe that the amount you owe on your first mortgage is about the same or less than the current value of your house?
Did you answer YES to all of these qualifications? If so, follow this link to figure out the documentation you’ll need for your lender and to learn about next steps.
Home Affordable Modification (For Struggling Homeowners)
The Homes Affordable Modification portion of this program provides incentives to mortgage holders and servicers in exchange for modifying home loans into payments that match 31% of the borrower’s monthly gross income. It is designed to curb millions of foreclosures for families that are struggling to meet financial commitments and on the verge of foreclosure.
This program will not help all struggling homeowners; review the qualifications below to see if you qualify.
• Is your home your primary residence?
• Is the amount you owe on your first mortgage equal to or less than $729,750?
• Are you having trouble paying your mortgage? For example, have you had a significant increase in your mortgage payment OR reduction in your income since you got your current loan OR have you suffered a hardship that has increased your expenses (like medical bills)?
• Did you get your current mortgage before January 1, 2009?
If you answered YES to all of these requirements, visit this link to learn what you can do next to move forward with a loan modification.
J.P. Morgan Chase is lowering interest rates, but not mortgage principals
It’s not clear what every bank is doing to modify mortgages, in a recent video featuring Jamie Dimon, CEO of J.P. Morgan Chase, he mentioned that Chase was not modifying the principal of any mortgages; instead, they are lowering interest rates for a period of 5-years. After the 5-year period, the interest rates increase to current levels (around 5%).
Chase estimated that they alone would modify the interest rates on over 600,000 mortgages and that the number may end up closer to 1 million. The question is – will those 600,000 homeowners be in the same situation again in 5 years. If so, are these loan modifications setting our economy up for long-term stability or are they simply another round of adjustable rate mortgages?
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I know that the economy is down and something needs to be done, but is this the best solution. Where are these millions of dollars coming from? Is this plan causing our national debt to grow?
@ Colleen: I’m not sure whether we should be worried about this right now. The first responsibility Obama has (in my humble eyes) is to help the American people keep their homes.
Yes, it might increase national debt but then who says the government can’t just “print” money on demand anyway?
I think this new rescue plan was much needed but in the end, time will tell won’t it?
Walts last blog post..Florida Tax Lien Information
Obama rocks! At least he is proactive in regards to helping people unlike Busch ever was.
Now home owners have new hope about their future and with the current state of our economy this can’t be bad surely?
Rose
Roses last blog post..Where To Find A HELOC Calculator?
Colleen, I’m not too sure if this is the best solution. I personally am not a fan of government invention, but I’m more a fan of supporting our President (who ever it is). He can’t succeed without support.
Yes, all of these plans increase our national debt considerably. My best guess is that the money is borrowed, printed and just made up. The biggest problem is that all of this investment can cause inflation…maybe hyper-inflation, but as Walt mentioned, only time will tell.
Walt – thanks for stopping by and answering Colleen’s question.
There’s a lot of controversy, and there are a lot of questions over whether this plan will, you know, work. I guess we’ll all watch and see – I definitely want the best for especially first time buyers.
I’m not usually a fan of government intervention when it comes to private industry, but this mess will obviously not be resolved by itself. If the government does not create strict guidelines for lenders and borrowers, we’re libel to see foreclosures continue to rise and values plummet.
Now we get to see if it will actually help at all. Keeping my fingers crossed…
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Office Space – Yep, only time will tell if the plan works
Miami Beach Condos – The good news is that part of the plan calls for strict guidelines. If they’re not enforced, we could easily see things get worse
Charles – I’m keeping my fingers crossed too; I agree, we finally get to see if this plan works…I doubt the market could handle anymore anticipation
Hello everyone,
I was behind in my mortgage payments by about 5 months due to my husbands income loss, when I found a company that saved my home. That company was called 21st Century Legal Services the modified my home loan to an affordable payment that I could afford. I highly recommend this company, I thank them from the bottom of my heart they kept me in my home. So if you are in danger of loosing your home I suggest you call them as soon as you can.
-Beth B
Regarding Walt’s comment about printing more money. I’m sure there’s danger in that. Printing more cash devalues your currency.
I’m reminded of b&w pictures from when I was a kid of some european country with the people pushing wheelbarrows full of notes down the street to buy a loaf of bread.
I don’t personally think this is the end of the financial meltdown, at least not for the normal joe on the street.
Loan modification can be a easy process as long as you prepare yourself with the needed information to go head-to-head with your broker. Knowing all the details about your loan package will not only save you some heartache but get you the best deal when saving your home. Google is a great source of information to learn about loan modification and helping you learn as much as you can.
Great concerns about this.
Obamas plan sucks. There are millions of American families still loosing their homes. He has not forced the lenders to do anything. They are only asked. And if you don’t have a loan with Freddie or Fannie you are screwed.
It’s true. If your loan isn’t owned or backed by Freddie or Fannie… not eligible. If it is owned by them, don’t get your hopes up. Any relief comes not from Freddie or Fannie directly but from the middlemen that collect fees for “servicing” that loan. You know, like the bank you send your mortgage payment to each month. Problem is, the banks are not required to participate in the program. If your bank decides no, sorry then, no rate reduction for you. Of course, you can choose to refinance for around $5000 in closing costs. Not that that would be an incentive for a bank to opt out. Good deal, eh? I hate to say it, but I can’t see how this program can help anything but a very small minority of homeowners. Many of them who probably don’t really even need the free money. It’s an expensive political ornament.
Michael is not entirely correct. There is much misinformation on the web about these programs and I also believed I was not eligible until I did more homework. Bottm line is if your loan isn’t owned or backed by Freddie or Fannie, you will not qualify for the REFINANCE program, but you may still qualify for the MODIFICATION program. As for many of the borrowers not really needing the “free money”, there are guidelines that may not totally prevent it, but will certainly reduce the incidences of that happening. I suggest people like Michael, as well as the authors of the other incorrect websites I visited, read the full guidelines of the program before misleading others, perhaps with tragic results.
Unfortunately, it IS voluntary for the lenders. Michael is correct about that.
t’s true. If your loan isn’t owned or backed by Freddie or Fannie… not eligible. Obamas plan sucks. There are millions of American families still loosing their homes. He has not forced the lenders to do anything. They are only asked. And if you don’t have a loan with Freddie or Fannie you are screwed.
I’m having difficulty with Countrywide mortgage will not help me with stopping foreclosure against my only home. I’m a very sick person and running out of time to keep my home, please help me thank you!
John, there are other programs one can qualify for, HASP is not the only one. Some of which drop the requirement for Fannie and Freddie.
I wasn't behind on my payments ever, but most of my income went to my mortgage. I called this company called Novadebt ,which is a counseling center for the Hope alliance, which is a part of Obama's Home mortgage modification program. It's a long process, it took my mortgage company 3 months after I sent the necessary paperwork for them to get back with me. Me being a single mom of eight kids I'm strapped financially. My mortgage payments were lowered over half of what I was paying before, which is pretty good considering my payments were almost $2000 monthly. My apr was lowered to 2% from 9.75% I thank everyone who helped out myself and my family, we were considering selling but now we can keep our home. It's a great feeling…….
My loan wasn't with either Freddie or Fannie and it was reduced to half of what I was paying before. I don't know why it wouldn't work for anyone else. I think you can't be late on payments for the government plan, I'm not sure though.
WHO HELPED YOU? I HAVE BEEN A VALLEY NATIONAL BANK CUSTOMER FOR ABOUT 20 YEARS, AND THEY WILL NOT DO MODIFICATIONS THIS IS AFTER THEY GAVE ME FALSE HOPE, ALOT OF PAPER WORK AND A LONG TIME I WENT WITH NO RESPONSE. I WAS MADE TO FEEL ASHAMED OF MY PRESENT SITUATION AND THEN TOLD THAT THEY CANT HELP ME . I KNOW I AM OR WAS A PRIME CANDIDATE FOR THIS PLAN BUT I DONT HAVE A FANNIE OR FREDDIE LOAN AND IM LOSING ALL HOPE. ALL I DO IS CRY.I DONT KNOW WHERE TO TURN FOR HELP. I HEARD BANK OF AMERICA WAS DOING MANY MODIFICATIONS BUT ONLY IF YOU HAVE YOUR PRESENT MORTGAGE WITH THEM. I EVEN TRYED HOPE (HUD PROGRAM) BUT AFTER AN HOUR CONFERENCE CALL I WAS THEN TOLD THEY ONLY HELP YOU WITH COUNCELING . SOMEONE PLEASE HELP ME IF YOU KNOW OF A LEGIT LENDER WHO IS WORKING WITH MODIFICATIONS (NON FREDDIE OR FANNIE) IF ONE EXIST…
The Home (Obama’s) Loan Modification Program is nothing but a publicity stunt, it sucks. I know i qualify based on the eligibility requirement; I’m using my house as a primary residence, my mortgage balance is $410K, i lost my job in May 2008 so I had a past due balance is $45K. I was put in a forbearance for 6 months and i was paying the amount of $1,470 religiously from Jan to Jun 09. I spoke with an SPS representative and was recommended for a loan modification under the Obama program and was denied recently. They did consider the appraisal of the property which is $215K but to no avail. The next step will be, according to SPS rep is an in-house (SPS) loan modification or “SELL THE HOUSE”. I don’t think the SPS loan modification wil help me save my home considering the value of my loan now is $467K (inclusive of original loan amount of $410K plus past due of $45K plus property tax arrears of $12K. So my real hope is getting approved under the Obama program otherwise me and my spouse will be out of our home.
JP MORGAN and CHASE is FALSE. They have not helped anyone yet. Most of the people in my neighborhood has a mortgage through them or either they have bought out the companies that owned their homes. Currently everyone is on an 8-9month hiatus of waiting for modification to go through. The only thing that JP MORGAN and CHASE has been doing is calling to either collect a debt (mortgage payment) or else giving false hope by saying, dont worry, just make your monthly payments and we will see that you modification goes through as it shows that its been modified as we speak! That has been the given answer from their representatives for the past 5 months now.
I have owned my home for 5 years now. When I bought it at 215xxx I had a good job, no kids, no bills. 5 years later, I have 2 kids, laid off – but luckily landed a new job but less pay, and am struggling to make payments now. Still to this date I havent been late on my payment of 1900 a month. I recently got my house appraised and the value of the home has dropped more than 80% – from 246xxx to 150xxx. JP MORGAN and CHASE has recently contacted me to either pay or another option is to sell my home. I do not want to sell my home. I just want a fair modification program as to where it meets my homes fair market value, but it seems like JP MORGAN and CHASE is only after money in our pockets.
I have applied for a home modification, and have not had any luck with my loan company. This process started back in 4/2009, now it is 8/2009. I have sent in my paper work several times only to be told that I have missing information. The problem with this is that every time I ask the mortgage company as to what they need the say that one form is missing. When I send the form that they claim is missing, I call to follow up on the form, at this time Im told that another form is missing. This has been a on going expierence with Wamu-JP Case.Does anybody know where I may be able to get help with this problem?
This program is a complete scam. The Mortgage companies can’t be as stupid as they act. After reading the horror stories on this program. Mine is a carbon copy of thiers. I submitted 22 April 2009 for a Loan Modification. 28 Aug – 4 Months later they asked me (for the last time because I blessed them out and told them not to every call again) for the same paperwork they asked for 12 times in a row. Every weekend same story. We need your paperwork. I sent it over and over again, then called and wrote thier (INDY MAC) loss / mitigation deptarment. They ran me in circles. Wasted my time, thier time. I’m suffering, about to go under and Obama’s wonderful program doesn’t even exisit. Shame on Obama, Shame on America for voting this Anarchist in to power. I was supporting him until now. Wake up America. My accounant tells me that 10 other people have applied she is aware of and the same song and dance is happening. Shame, Shame, Shame. I raise my fist against You.
Very useful article indeed. Thanks to President Obama for this amazing solution in the face of world wide crisis. The one thing that worries me a lot is those people who were taking huge loans even knowing that they would be never able to pay it back. That’s why this terrible crisis has started. All because of non-clever people. I hope they won’t get any loan modification program, because it would be really unfair.
I’m not a huge fan of Obama, but the insistence on using loan modifications as a viable alternative to foreclosures is a smart move in my opinion.
We’re 7 months in now and the program is improving. Still a long ways to go, though, considering how many eligible people are still out there that haven’t been approved for the program.
I’m glad to see the program actually start helping people and that it just wasn’t a bunch of political fluff. I think banks still have a long way to go though before the program is truly effective.
I agree with office space, only time will tell if this will really work. Although I think it is long overdue!
Making money from blogging is certainly no easy street at first. There Are a lot of trial and errors and I’m not sure that it ever is an easy street thing to do ever. There are always exceptions to the rule of course and there is also some good basic money to be made. It’s important to see that one blog is probably not going to do the trick, and certainly it won’t be the first blog you try. But seeing this as a training ground and repeating what works on a larger scale and ditching what isn’t working will see success in the end.
Obama’s plan is an important part of the process of people getting back on their feet. People can not lose their homes if we want the economy to improve!
I do not know a single person that has qualified for a loan modification,
so that is making me think that I wont.
Why is it that 75 Billion is accessible in loan modification, yet when you apply you are left unattended for months on end. are they hoping for foreclosures. Some banks will turn a loan modification application around within 8 to 10 weeks, yet others it takes 4, 5 and 6 months. As you can probably guess I am one of them. this is my only home and I am trying to hold on to it, however what do you do when your totally out of resources. I do work, I do pay mortgage, however late on a constant bases as unfortunately the pay check just doesn’t cover it all anymore. Any suggestions? Other than calling them for updates every week as I already do that and still have not made any headway.
We have been waiting 7 months! for a modification, or refinance decision. I was originally told it would take 30-45 days! I have handed in ALL of the paperwork in a timely fashion. Wells Fargo bought Wachovia bank where the mortgage originated and much of the paperwork got misplaced and I had to resubmit. 4 months ago, my credit was good, but now it has gone downhill while we have been waiting to see if a solution could be reached. Wells Fargo claimed they sent me a letter asking for additional information, but I never received it. I have followed up from once a week to almost every day to try to expedite this to no avail. This has been a scam, and it making my financial situation worse as I have been out of work for several months.
I really hope that these measures are helping people who need help the most. It’s terrible to think of folks losing their homes because of mortgages that are too expensive for them.
This is a wonderful idea sanctioned by obama. There are many people stuck paying extortionate interest rates on mortgages which is terrible considering interest rates are very low at the moment.
I started my loan mod in Aug 09, here it is 8 months later, after sending the same info in multiple time , I get a letter saying I may not qualify. I’ve been current on all my trial period payments. This is ridiculus, 8 months and nothing. To add insult to injury I recieved my interest tax statement and all the trial payments and interest isnt counted. This is just a big scam!!!
Desperate in Mass. we just went through the same thing. We called a lawyer today and he says we have a case. They actually told us not to make a payment for 2 months because it would mess up the finalization process, then they tell us it was denied, it is in foreclosure, we have to pay late charges and pay 9,000 some odd dollars to catch everything up. I would have paid it knowing this would happen! I know every phone call to them is recorded, so that is where THEY screwed up, because that proves our side. I AM GOING TO FIGHT THIS!!!
The Home Affordable Modification Program is an excellent program if you can get through the application! After taking days to read & understand how to fill out & quality for HAMP I was able to lower my interest rate to 2%. The application was so confusing because they want you to fail! Now that I understand how to qualify I was able to help my neighbors get approved usually in about 30 days!
Nice post. Really a good advantage that we should take. It does not hurt just to look into it. So what are we waiting for? I’m pretty sure were going to end up in a good deal anyway. Really informative
The loan modification program isn’t perfect, but it is still a good thing that Obama is trying to resolve the housing crisis, along with the rest of the Federal government.
Don’t know why Chase is giving people such a hard time. After jerking me around for about 4 months, they denied me stating that my situation was “temporary.” Well, 7 months later everything is the same so I guess they’re not so smart after all. Anyone have any suggestions? Thanks
We are an active duty military family and have also been working with Chase for 13 months now. This is how long they have been giving us the run around. We are working with a load mod legal office and still , we have nothing from Chase. When we started our loan mod, we were on time with payments with my husband in the military due to deploy again and me home ill with a child and a elderly father that depends on my care. My job was downsized and much of my income was lost. We qualify for a moad mod, but it has been one excuse after another. One month it is ” we cannot read your bank statements, another month “we cannot read your husbands LES” ( pay stub) then it is a letter explaining my husbands income deployed since it will not be the same when he returns. We of course purchased our home in the height of the market with a sizable down from the sale of our first home. We still owe far more than what the home is worth, yet we have only asked that they lower our interest into a monthly payments that we can afford and lock us into a 30 year fixed. The way the Obama plan works only benefits the banks when people foreclose. This is why the banks force so many forclosures. Instead of working with homeowners, the plan as it sits, bails the bank out when one owes lets say” $450,000 and the home forecloses and sells for $350,000. The bank then gains another 30 years of interest plus the $100,000 plus any lates and fees..back from the Obama plan. No wonder why the banks force people to forclose. The Obama plan needs to have strict rules with no bail out when the homeowners could have stayed with a lower payment, this is the only way that the banks will start to work with homeowners instead of forclosing.
Obama is a great president wants to help but corrupt bankers are more powerful and have all the money you want to cheating and stealing and licensed
@scotti64- My mortgage is with Bank of America.
The program does not help anyone. I have even talked to several lawyers in our area trying to get help and they know of no one who has actually received true help
I got laid off in July, 2010. First thing I did was call BAC. Oh they were so helpful… don’t worry Carol we are not going to let you lose your home. They sent me the application packet (they actually send me 2 of the same packets) I fill out the application gathered all the documentation and FedEx it to the Mod program on Aug. 13, 2010. Called to confirm they had received everything they needed. Verbally they said they had received it.
On Oct. 13, 2010 – note 2 months later I call to be told we haven’t received all the needed documents. You (not them but me) are missing two months of bank statements and your signed Form 4506-T. Now supposedly if you are missing documents you should receive a letter from the Modification Team. I only found out I have missing documents because I called. Oct. 13 I faxed that documentation and received verbal confirmation all docs had been received. Although every time I call to “check the status of my request” I would be told all docs have not been received I would have to argue with them to look through my entire file because all docs have been received. “Oh ya, here they are, so your file is complete all docs have been received and you are in underwriting. Then you will move to Quality Control for review and blah blah blah. Same crap different week”
I have called these people every Monday morning from Oct. 13, 2010 – Feb. 7, 2011 and the same thing every time.
Then Feb.14, 2011 I received a call from BAC Home Modification. I was so excited… They called me, this must be a good thing right? The voice at the other end informed me that I would not be calling the other number anymore instead I will be calling him at ###. Wow now I am really excited –you know cloud 9 excited, someone permanent to call… not just who ever. Next he told me I needed to update all my documents as the ones on file are outdated…. Wam bam hit the ground – excitement gone. I have to what? Ya and we need the updated documents by March 17, 2011.
I gathered all needed documents and this time FedEx with signature required all the address provided on March 2, 2011. I called my person, he actually answered the phone. I told him the docs had been sent FedEx and I have notice of receipt by BAC on March 3, 2011. I want to make sure they reached your hands. He informed me that it could take up to a week for my docs to be scanned for him to review.
Ok so I wait one week and one day… March 3rd I called my person…. Only this time when the phone is picked up it is my person informing callers his number has changed it is now #####. I call that number and guess what??? I am back to talking to whoever answers.
Have you ever asked so how many people has the program helped? Good luck getting an answer. It seems no one has any information on this topic.
I Agree with susan The loan modification program isn’t perfect, but at least Obama is trying to resolve the housing crisis in the US
well,no matter what the banks will win again on the long run …just like Vegas….we are the little people who will pay for this ,they get bailed out and the CEO s still getting millions after destroying their organizations ,
For anyone that has attempted a loan mod with Chase, you know that Chase will not work with you. They will string you along until you can no longer make your payments then forclose. We are active duty military and when I became ill, and my employer cut hours, we were forced to reach out for help. It will be 3 years in October and all that Chase does is ask for my husbands updated LES (check stub) on a monthly basis to “stay in the program” what program????? Nothing has been set. No reduction in interest, nothing at all and since my husband is deployed, we could essentially sit in this house making no payments for two years, but since we want to keep our home, we make all payments on time, but cannot really afford it without my income. Just beware. Obama has not forced nor will he force the banks to work with people. The banks get the bail out, but it is optional for them to work with you. Do your homework before you get too excited about yet another program that over promises and under delivers.
With Feb . the year just gone, the government discovered the actual Producing Household Affordable System, which consists of a couple main software programs: one with regard to loan modifications and the other for re-finance lending products. The financial loan change section is termed this Hamp Personal loans (HAMP). It truly is built to lessen mortgage loan requirements battling house owners shell out monthly to help sustainable degrees. The actual re-finance program’s known as the home Cost-effective Re-finance Software (HARP). Beneath HAMP, loan modifications will likely be standardised, along with consistent loan mod recommendations utilised by Fannie along with Freddie Macintosh personal computer, and so they will be implemented all over the country home finance loan market.