Making Home Affordable – Do You Qualify?

You’ve probably been hearing a lot of talk about President Obama’s Making Home Affordable Plan, but aren’t sure if you qualify or not. Unfortunately, chances are high that you don’t – rigid restrictions set in place and the newness of it all (coupled with bad communication and poor customer service – just my opinion) are making it hard to people to get the help they need. I’ve been mulling around the Making Home Affordable website for a few days, and here’s what I’ve found.

If you are current on your loan, you could qualify for a Home Affordable Refinance. By current, they don’t mean that you are caught up with your payments. If you have been over 30 days late in the last year, you are not considered current (crazy, I know). So let’s say you are current by their standards. In order to refinance, your loan must be backed by Fannie Mae or Freddie Mac. This very quickly makes about half of all families ineligible. Another stipulation is that your first mortgage cannot be more than 125% of the value of your house. For example, if your mortgage is $150,000 your house cannot be worth less than $120,000. This is a huge problem for most families in Michigan due to the rapid decline in house values. Sill eligible? Let’s keep going. While refinancing from an adjustable rate or balloon payment to a fixed rate is definitely an improvement in the long run, the problem lies in the fact that your mortgage payment may not go down with a Home Affordable Refinance. This means that if after the refinance, you still do not have the ability to make your payments, a refinance is not for you.

If your mortgage is not backed by Freddie Mac or Fannie Mae, there is another option out there – the Home Affordable Modification. With this option, if you are behind on your payments may qualify for the program. The main problem with the modification is that only the first mortgage can be modified. In order to qualify, your first mortgage payment has to be more than 31% of your gross monthly income. That is, if your family is making $35,000 a year, your first mortgage payment must exceed $904 a month. That seems extremely high to me. Push that income up to $50,000 and your payment has to exceed $1,290! Many times it is not the first mortgage that is causing problems for individuals – it’s the pesky equity loan or second mortgage. Remember, that 31% rule isn’t taking these into consideration. Add another $250 onto that, and your $1,290 payment goes up to a whopping $1,540. Another reason many people have fallen behind on their mortgages is because they have income properties that didn’t quite work out, or were affected by the housing crisis. If you don’t live in the house, you are not eligible for a Home Affordable Modification.

So, you meet the stringent requirements for either a the Refinance or Modification programs? Now comes the fun part! You get to call your mortgage company and ask for one of these options. The Making Home Affordable website tells you to “be patient” because these programs are newly implemented, and it might be a while before all applications can be processed. According to CNN.com, only 6% of eligible families have actually been helped so far. I’ll give you another reason to be patient: Most Banks Are Slow. I know – I’ve been working for them and with them for the last two and a half years. They lose your paperwork, they don’t contact you (except to collect money), and there is poor communication within. You’ll get customer service representatives giving you the wrong information or passing you off to someone else. Be prepared for some serious aggravation and time loss.

If you are one of the majority of people who don’t qualify for these programs or simply don’t have the patients required, and want to avoid a Michigan foreclosure, give us a call. We will never ask you for any money, or to do any repairs to the house. We promise that we will never put you in a worse situation, and that we will work harder than anyone else to give you a permanent foreclosure solution. We also promise to keep everything confidential. Give Emily a call at 269-385-5921 – we look forward to hearing from you!

Holly

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