The new Housing-Aid Plan, according to the administration, is estimated to cover as many as nine million mortgage holders nationwide. It has two main components.
PART 1: Loan Modification
The first part supports borrowers who have kept up with their mortgage payments, but have lost so much value in their homes that they don’t have the equity necessary to refinance. Therefore, they are unable to take advantage of the present record low interest rates, which are hovering around 4%.
You WIN if you have payments of more than 31% of your pretax monthly income and you can prove hardship.
You WIN if you occupy a single-family home and can prove the home is your primary residence.
You WIN if you have an unpaid principal balance of $729,750 or less.
You WIN if you have a mortgage originated on or before January 1, 2009 and make all the modified payments over a trial period of three months or more.
You LOSE if you are not about to default.
You LOSE if you are an investor with a home that is not owner-occupied.
You LOSE if you have a home that is vacant of condemned.
You LOSE if you have an unpaid principal of more than $729,750.
You LOSE if your mortgage is packaged into securities whose rules explicitly forbid modification.
You LOSE if you have loan servicers who can’t be reached or are unwilling to consider modification.
PART 2: Loan Refinancing
The second part of the plan is geared toward borrowers who are already delinquent in their loan payments or are in eminent danger of default and aren’t able to refinance, perhaps due to a decrease in the value of their home.
You WIN if you have loans owned or guaranteed by Fannie Mae or Freddie Mac.
You WIN if you are current on your mortgage payments.
You WIN if you can prove the ability to afford the new mortgage debt.
You WIN if your mortgage balance is no more than 105% of your current estimated home value.
You LOSE if you have loans owned or guaranteed by a company other than Fannie Mae or Freddie Mac.
You LOSE if you have been more than 30 days late on a payment in the past 12 months.
You LOSE if you can’t afford the new mortgage debt.
You LOSE if your home price has fallen so that the loan is more than 105% of the market price.
