President Obama

1
President Obamas Making Home Affordable

• By
• Garlen Han
• REALTOR / Loan Consultant

2
Objectives

• Understand what President Obamas Making Home
  Affordable programs are
• What is Home Affordable Refinance and its
  requirements
• What is Home Affordable Modifications and its
  requirements

3
Two Different Programs

• Home Affordable Refinance
• Home Affordable Modifications

4
Home Affordable Refinance

• Eligibility requirements
• _ 1 4 units
• No late payments (Last 12 months)
• LTV (Loan To Value) lt 105
• Stable income to support new payment
• Your loan is owned by Fannie Mae or Freddie Mac
• Loan amount is up to 417,000.

5
Find out if your loan is owned by Fannie Mae of
Freddie Mac

• For Fannie Mae
• 1-800-732-6643 (800AM to 800PM EST)
• www.fanniemae.com/homeaffordable
• www.FannieMae.com/LoanLookup
• For Freddie Mac
• 1-800-373-3343 (800AM to 800PM EST)
• www.freddiemac.com/avoidforeclosure
• www.FreddieMac.com/MyMortgage
• Freddie Mac only allows refinance through the
  same lenders as current loan.

6
If You Are Eligible

• Call your Loan Servicer / Lender to inquire about
  the program
• Prepare your documents
• Proof of your monthly gross income
• Proof of household monthly gross income
• 2 pay stubs
• W-2
• Most recent income tax return

7

• 2 months bank statements
• Information about your 2nd loan (If Applicable)
• Credit card balances and minimum payments
• Other balances and monthly payments (I.e. Student
  and car loans)

8
What Refinancing Will Do

• (Possibly) Lower your monthly payment
• M.I. will not be required if your existing loans
  dont have M.I. even your new loan is more than
  80 LTV
• Closing costs will be similar with the regular
  refinancing

9
What Refinance Will NOT Do

• Will not reduce your principal
• Will not have longer term of existing loan
• Will not let you cash out
• Will not qualify if your existing loan has M.I.
  (Mortgage Insurance)
• Will not refinance the second loan or combine
  with the first. If 2nd loan exists, must be
  re-subordinated
• If the existing loan is a fixed rate program, the
  new loan cannot be adjustable

10
Home Affordable Modifications

• Eligibility requirements
• Owner occupied (NO INVESTORS)
• Got your loan before January 2, 2009
• 1-4 units
• Unpaid balance lt 729,750 (1 unit) 934,200 (2
  units) 1,129,250 (3 units) 1,403,400 (4 units)
• A mortgage payment gt 31 of gross monthly income

11

• Can no longer afford the mortgage payment
• Can prove Financial hardship (i.e. Laid off,
  pay reduction, cut hours, etc.)

12
If You Are Eligible

• Call your loan servicer / lender to inquire about
  the program
• Prepare your documents
• Proof of your monthly gross income
• Proof of household monthly gross income
• Information about your 2nd loan (If applicable)
• Credit card balances and minimum payments

13

• Most recent income tax return
• W-2
• Information about your assets
• Other balances and minimum payments (I.e. Student
  and car loans)
• Utility bills (water, PGE, trash, etc.)
• If possible, write a letter of explanation of
  situation why do you need help?

14

• If you have missed payments, you may still
  qualify.
• If you have a 2nd loan, you can still modify the
  1st loan

15
What The Servicer Will Do

• Determine if you meet the criteria
• Determine if the cost of modification is less
  than a foreclosure. If yes
• Try to bring your payment down to 31 of your
  gross income
• Reduce your interest rate (to as low as 2)
• Extend your payment term
• Defer portion of the amount you owe until later
  time (Could end with a balloon payment)

16

• Possibly reduce the amount you owe (Depends on
  the investor)
• Put you on trial modification for three (3)
  months
• If successful (that means you can pay, and are on
  time with the payments) will set it for five (5)
  years

17
What Happens After 5 Years?

• Beginning on the 6th year, the rate will increase
  no more than 1 point per year until it reaches
  the rate cap
• Rate cap The market rate on the day your loan
  was modified
• If the modified rate is at or above the
  prevailing market rate, then the modified rate is
  fixed for the life of the loan

18
How Much Will It Cost Me?

• There is no cost to borrowers
• Past due charges (interest, taxes, insurance) are
  added to the loan balance
• Late fees will be waived
• Do Not pay other companies (in advance) to help
  you get your loan modified
• If you really need to, pay them only after you
  got your loan modified

19
Why Would A Loan Servicer Want to Help Me?

• The participants in these programs get
  substantial financial support and incentives
• Participants are required to review and evaluate
  all potential eligible borrowers

20
How Do I Know If My Servicer Participates?

• Call and ask them
• Check www.FinancialStability.gov
• MakingHomeAffordable.gov
• Participation is mandatory if they accept future
  funding from the Treasurys Financial Stability
  Program

21
Is There Financial Incentive to Borrowers?

• Yes
• The Treasury will pay an incentive that reduces
  the principal balance on your loan for every
  timely payment that you make
• Over 5 years the total principal reduction could
  add up to 5000

22
Recap

• President Obamas Making Home Affordable programs
  are
• Home Affordable Refinance (Its requirements)
• Home Affordable Modifications (Its requirements)

23
You Have More Questions?

• www.FinancialStability.gov
• www.MakingHomeAffordable.gov
• www.fanniemae.com/homeaffordable
• www.freddiemac.com/avoidforeclosure
• Thank You For Your Participation
• Garlen Han