Freddie Mac on the Making Home Affordable Program

In support of the Federal Making Home Affordable Program, Freddie Mac and Fannie Mae will offer two initiatives that will help keep more families in their homes, stabilize communities and assist homebuyers during this difficult time. Under the plan, eligible homeowners can:

• Refinance your mortgage to a new, potentially lower interest rate, with additional flexibility to assist many homeowners who have previously had difficulty refinancing due to declining property values. You'll need to be current on your mortgage payments to qualify for this refinance.
• Obtain a modification on your mortgage that can potentially reduce your monthly payment, or offer other alternatives that can help you keep your home. This program is for homeowners who are delinquent in their mortgage payments, in the foreclosure process, or are current on their payments but have recently experienced significant hardship. Significant hardship includes circumstances that may make it difficult for you to pay your mortgage going forward.

Through these and other options, the U.S. Treasury, Freddie Mac and Fannie Mae hope to help more troubled and current borrowers with critical solutions through these initiatives that will help stabilize home ownership for the nation's families and their communities.

How Can I Qualify?

Refinance
If you are a homeowner who is current on your mortgage payments but unable to refinance because your home value has decreased, you may be able to refinance to a lower rate, lower-risk loan through the refinance solution that is part of this program.

Examples of how the refinance program can help you:

• Fixed-rate mortgage to fixed-rate mortgage
• Adjustable-rate mortgage (ARM) to fixed-rate mortgage
• Super conforming fixed-rate mortgage to super conforming fixed-rate mortgage

Loan Modification
If you are a homeowner who is behind in your mortgage payments, in the foreclosure process, or is current on your payments but have recently experienced significant hardship, you may be able to modify your loan to a lower rate through the Making Home Affordable Modification Program. Significant hardship is circumstances that may make it difficult for you to pay your mortgage going forward.

Examples of loan modifications through the program:

• Borrower in imminent default
• Delinquent borrower (not in foreclosure)
• Delinquent borrower in foreclosure

What If I Can't Qualify?

If you are working with your lender to keep your home, known as retention, there are several options:

• Reinstatement: Your lender may agree to let you pay the total amount you are behind, in a lump sum payment and by a specific date. This is often combined with forbearance when you can show that funds from a bonus, tax refund, or other source will become available at a specific time in the future. Be aware that there may be late fees and other costs associated with a reinstatement plan.
• Forbearance: Your lender may offer a temporary reduction or suspension of your mortgage payments while you get back on your feet. Forbearance is often combined with a reinstatement or a repayment plan to pay off the missed or reduced mortgage payments.
• Repayment Plan: This is an agreement that gives you a fixed amount of time to repay the amount you are behind by combining a portion of what is past due with your regular monthly payment. At the end of the repayment period you have gradually paid back the amount of your mortgage that was delinquent.
• Loan modification: This is a written agreement between you and your mortgage company that permanently changes one or more of the original terms of your note to make the payments more affordable.

If you and your lender agree that you cannot keep your home, there are a number of liquidation terms you should understand:

• Short Payoff: If you can sell your house but the sale proceeds are less than the total amount you owe on your mortgage, your mortgage company may agree to a short payoff and write off the portion of your mortgage that exceeds the net proceeds from the sale.
• Deed-in-lieu of foreclosure: A Deed-in-lieu of foreclosure is a cancellation of your mortgage if you voluntarily transfer title of your property to your mortgage company. Usually you must try to sell your home for its fair market value for at least 90 days before a mortgage company will consider this option. A deed-in-lieu of foreclosure may not be an option if there are other liens on the property, such as second mortgages, judgments from creditors, or tax liens.
• Assumption: An assumption permits a qualified buyer to take over your mortgage debt and make the mortgage payments, even if the mortgage is non-assumable. As a result, you may be able to sell your property and avoid foreclosure.

While refinancing is not necessarily a good option when facing foreclosure and can sometimes even be a predatory practice, there are instances where it may help. Talk to your lender to see if refinancing is an option for you.

(Article from FreddieMac.com)