Refinance to avoid foreclosure

I am working with a few clients here in SANDPOINT, IDAHO who find themselves in the, all too, familiar plight of being upside-down on their mortgages and not knowing where to turn. This has been the recurring theme of our economic crisis for the past six years and one of the major stumbling blocks to a housing recovery.

Making homes affordable, especially with current homeowners, remains the hurdle that our nation needs to address. Fannie Mae does have a program out there (the Home Affordable Modification Program) that takes a stab at helping these homeowners and, while this has been discussed often on AR, it is important to keep the information out there in hopes that this program gets adequately utilized. There are some hoops to jump through, to be sure, but it is certainly worth the effort to explore the options.

The Home Affordable Modification Program provides tools to mortgage lenders and homeowners coping with financial hardship and declining home prices. Home Affordable Refinance includes new refinancing flexibilities for homeowners whose loans are owned by Fannie Mae. Key features include:

• Borrowers refinancing an existing Fannie Mae loan are not be required to buy new or additional mortgage insurance if the loan at the time of the refinance is more than 80 percent of a home's value. In addition, Fannie Mae can refinance loans up to 105 percent of a home's value. This could allow a homeowner to take advantage of lower interest rates that reduce monthly payments, or refinance into a more sustainable mortgage.
• Brokers using Fannie Mae's Desktop Underwriter® platform will be able to process an application to refinance any existing Fannie Mae loan, allowing for greater lender origination capacity and easier refinancing for borrowers.

What Borrowers Need to Know:

• To qualify, your mortgage loan must be owned by Fannie Mae.
• You must have a solid payment history on your existing mortgage. (This can be negotiated if the homeowner has made a concerted and verifiable attempt to make timely payments)
• The expanded refinance flexibility ends in June 2010.

Home Affordable Modification

Loan servicers participating in the program may reduce interest rates, lengthen the payment time frame or take other steps, such as principal forbearance, to bring the monthly payments down to as low as 31 percent of the borrower's gross (pre-tax) income.

What Borrowers Need to Know:

Certain eligibility requirements, including attesting to a financial hardship, may apply.

• To modify a loan, it must be for your primary residence.
• The amount you owe on your mortgage must be less than or equal to $729,750.
• The program is for mortgages originated prior to January 1, 2009.

Borrowers can find out if their loan is owned by Fannie Mae in one of two ways:

• Call your current mortgage lender or,
• Contact Fannie Mae. Call 1-800-7FANNIE or visit http://www.fanniemae.com/homeaffordable.