- The Washington Times - Friday, March 6, 2009

President Obama’s mortgage relief plan, announced Wednesday, aims to help up to 9 million borrowers qualify for more affordable mortgages and stay in their homes.

Are you one of them?

Mr. Obama’s Making Home Affordable program is designed to work with lenders to modify the loan terms for up to 4 million homeowners and to refinance up to 5 million homeowners into more affordable fixed-rate loans.

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Here are some questions and answers about the latest round of aid for homeowners:

Q: How do I know if I qualify for the refinancing plan? –- A: Only homeowners in good standing whose loans are held by Fannie Mae or Freddie Mac qualify.

The property must be owner-occupied and the borrower must have enough income to make payments on the new mortgage.

Borrowers can’t owe more than 105 percent of their home’s current value on their first mortgage. For example, if your home is worth $200,000, your first mortgage can’t exceed $210,000. Borrowers with a second mortgage can qualify as long as their first mortgage isn’t more than 105 percent of their home’s value.

Homeowners can’t take cash out during the refinancing to pay other debt.

Borrowers have until June 2010 to apply for the program.

Q: How do I know if my mortgage is owned by Fannie Mae or Freddie Mac? –- A: Call your current lender or mortgage servicer. You can find the phone number on your monthly mortgage statement or coupon book.

You can also contact Fannie Mae at 1/800/7FANNIE and Freddie Mac at 1/800/FREDDIE from 8 a.m. to 8 p.m. EST. Or, go to www.fanniemae.com/ho meaffordable and www.freddiemac.com/avoidforeclosure and fill out the online request forms.

Q: Which borrowers qualify for the modification program? –- A: You don’t have to be behind on your mortgage payments to qualify. Delinquent borrowers and current borrowers who are facing imminent default are both eligible.

The program applies to mortgages made Jan. 1 or earlier. The mortgage payment including taxes, insurance and homeowners association dues must exceed 31 percent of the borrowers’ gross monthly income.

The property must be the homeowner’s primary residence. It can’t be investor-owned, vacant or condemned. Home loans for single-family properties that are worth more than $759,750 don’t qualify.

The program is voluntary, relying on a $75 billion subsidy to encourage mortgage companies to participate. Lenders must agree to reduce the loan payments to 38 percent of a borrower’s monthly income. After that, the government and lender split the cost of bringing the payment down to 31 percent.

Eligible borrowers will have to provide their most-recent tax return and two pay stubs, as well as an “affidavit of financial hardship” to qualify for the loan modification program. In the affidavit, applicants will have to cite the reasons behind their financial woes, such as job loss or a drop in income. The government will then take steps to verify the information.

Borrowers are only allowed to have their loans modified once. The program runs through Dec. 31, 2012.

Q: Do FHA, VA or USDA home loans qualify for modifications under the Obama plan? –- A: Mortgages backed by the Federal Housing Administration, Veterans Administration or the U.S. Department of Agriculture are being modified under other programs. The Obama administration and Congress are working on legislation that would allow modifications of these home loans consistent with the Making Home Affordable program.

Q: What if I’m in bankruptcy or in active litigation over my mortgage? –- A: That doesn’t necessarily keep you from qualifying for the modification program. And borrowers in active litigation can modify their home loans without waiving their legal rights.

Q: What do I do to get help? –- A: For the modification program, call your lender or mortgage servicer to determine whether you are eligible. For the refinance program, first find out whether your mortgage is held by Fannie Mae or Freddie Mac. Then contact your lender, mortgage servicer or a mortgage broker for refinancing options.

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