Update1: Clark Howard Simplifies “Making Home Affordable” Planby Tim Manni
Update1 (02/02/10): This post has received a lot of comments from readers who are frustrated over the lack of communication between borrower and servicers. The Treasury recently made some mandatory changes to HAMP that are designed to improve servicer-borrower communications.
Click here to read our post titled “Changes to HAMP: Docs Required Upfront,” and share your experience by leaving us a comment.
Original post (published on 03/06/09): With all the executive summaries, Q&As, fact sheets, and guidelines, it’s easy for borrowers to get lost when dissecting all the text that has accompanied the president’s Housing Affordability and Stability Plan (HASP) in order to see if they qualify.
Clark Howard has gone the opposite route, dividing the qualifications for the “Making Home Affordable” plan into two categories: late borrowers, and current borrowers:
If you can not afford payments and can not refinance for whatever reason, you will have the opportunity to have your loan temporarily reduced to 31% of your monthly income. This applies to homes valued at up to $759,750 in most areas of the country. Your interest rate may drop to as low as 2% for the next 5 years!
Under the second scenario, those who are current on a mortgage held by Fannie Mae or Freddie Mac will also be allowed to refinance — as long as they’re not more than 5% upside down in their home. (Note: This does not include a second mortgage). The new loan you’ll get will likely be re-written to an interest rate of around 5.125%.
And you may also be eligible for assistance even if your loan is not with Fannie or Freddie. That’s up to your individual lender, so get in touch with them to find out if you qualify.
Another aspect of the mounting housing plan that could impact late borrowers is the mortgage cramdown. Pending a vote in the Senate, the cramdown would allow bankruptcy judges to reduce a borrower’s mortgage debt.