Making Home Affordable-Summary of Guidelines
Hello Las Vegas and Henderson… the MAKING HOME AFFORDABLE program finally took effect March 4, 2009 and will offer assistance to as many as 7-9 million homeowners. This bill will make their mortgages affodable and help to prevent the negative impact of foreclosures on families, communities and the national economy. I have compiled a list of bullet points pertaining to the program’s guidelines.
ELIGIBILITY AND VERIFICATION:
- Loans must have been originated on or before January 1, 2009
- First lien loans for owner-occupied properties with unpaid principal balances up to $729,750. Higher limits are allowed for owner-occupied properties with 204 units
- Borrowers must fully document their income with two most recent pay stubs and most recent tax return. Borrowers must also sing an affidavit of financial hardship.
- Occupancy status will be verified through borrower credit report and other documentation.
- Modifications can start from now until December 31, 2012 and can only be modified once under this program.
TERMS AND PROCEDURES:
- Participating loan servicers will be required to use a net present value (NPV) test on each loan that is at risk of imminent default or at least 60 days delinquent. The NPV test will compare the net present value of cash flows with modification and without modification. If the test is positive -meaning that the net present value of expected cash flow is greater in the modification scenario -the servicer must modify absent fraud or a contract prohibition.
- Servicers will follow a specified sequence of steps in order to reduce the monthly payment to no more than 31% of gross monthly income (DTI)
- The modification sequence requires first reducing the interest rate (subject to a rate floor of 2%(, then if necessary extending the term or amortization of the loan up to a maximum of 40 years, and then if necessary forbearing principal. Principal forgiveness or a Hope for Homeowners refinancing are acceptable alternatives.
- The monthly payment includes principal, interest, taxes, insurance, flood insurance, homeowner’s association and/or condominium fees. Monthly income includes wages, salary, overtime, fees, commissions, tips, social security, pensions, and all other income.
- Servicers must enter into the program agreements with Treasury’s financial agent on or before December 31, 2009.
PAYMENTS TO SERVICERS, LENDERS, AND RESPONSIBLE BORROWERS
- The program will share with the lender/investor the cost of reductions in monthly payments from 38% DTI to 31% DTI.
- Homeowners who make their payments on time are eligible for up to $1,000 of principal reduction payments each year for up to five years.
- The program will include incentives for extinguishing 2nd liens on loans modified under this program.
- No payments will be made under the program to the lender/investor, servicer, or borrower unless and until the servicer has first entered into the program agreements with Treasury’s financial agent.
- Similar incentives will be paid for Hope for Homeowner refinances.
Well there it is Las Vegas…what is your opinion? Do you believe this will help pull us out of this mess we are in? Do you believe this new program will help you personally? With the Las Vegas, Henderson Nevada housing market being one of the hardest hit along with California, Florida and Arizona I hope to assist many homeowners in qualifying for this program thus keeping my clients in their homes and making a change for the better. I would love to hear your comments on this matter so let me know how you feel about.
For those of you who have specific questions regarding this program or if you would like to attempt a refinance of your property contact me directly by phone at 702.526.3133 or via e-mail at mgarnes@garnesmortgage.com. You can also chat with me at yahoo ID ‘thefinancemaster’
Thanks for reading and make it a great day!!
