On February 18, 2009, President Obama announced his Homeowner Affordability and Stability Plan. Although Prospect Mortgage does not offer loan modifications under this plan, feel free to share this important information with your customers. The plan has two primary components:
Low-cost Refinancing. To be eligible, the loan on the property must be owned or securitized by Fannie Mae or Freddie Mac. These loans cannot exceed 105% of the home’s current market value. Here at Prospect Mortgage we offer qualified borrowers refinancing up to 95%. The Fannie Mae and Freddie Mac loans will have no prepayment penalties or balloon payments. There are no refinance cash-outs. Borrowers who are currently delinquent or have been 30 days overdue more than once during the past 12 months will not qualify.
Loan Modification. If customers wish to inquire about a loan modification, they may contact the company that is currently servicing their loan. To be eligible, homeowners must be at risk of default or foreclosure. Qualified participants must also have experienced financial hardship, including loss of income, a significant increase in expenses or an interest rate that will reset to an unaffordable level. Monthly mortgage payments (including principal, interest, taxes, insurance and homeowner’s association dues, if applicable) must exceed 31% of gross monthly income. The unpaid principal balance on the home loan must be equal to or less than $729,750 for one-unit properties (there is a higher limit for two- to four-unit properties).
If there’s a second loan, only the first mortgage is eligible for a modification, and it must have been originated on or before January 1, 2009. Qualifying loans include those owned or securitized by Fannie Mae or Freddie Mac. The government is working on getting other loan servicers to participate by offering substantial incentives.
If your clients want to find out if their loan is owned or securitized by Fannie Mae, your clients can call 1-800-7FANNIE, or visit www.fanniemae.com/loanlookup. Freddie Mac may be contacted at 1-800-FREDDIE, or by visiting www.freddiemac.com/mymortgage.
To learn more about the Homeowner Affordability and Stability Plan, visit www.makinghomeaffordable.gov.