New Homeowner Affordability and Stability Plan

Questions and Answers to the Obama $75 Billion Plan to Aid 9 Million borrowers suffering from falling home prices & unaffordable payments

Borrowers Who Are Current on Their Mortgage:

Q: I owe more than my property is worth, do I still qualify to
refinance under the Homeowner Affordability and Stability Plan?
A: Eligible loans will now include those where the new first mortgage (including any refinancing costs) will not exceed 105% of the current market value of the property. For example, if your property is worth $200,000 but you owe $210,000 or less you may qualify. The current value of your property will be determined after you apply to refinance.

Q: Will refinancing reduce the amount that I owe on my loan?
A: No. The objective of the Homeowner Affordability and Stability Plan is to help borrowers refinance into safer, more affordable fixed rate loans. Refinancing will not reduce the amount you owe to the first mortgage holder or any other debt you owe. However, by reducing the interest rate, refinancing should save you money by reducing the amount of interest that you repay over the life of the loan.

Q: When can I apply?
A: Mortgage lenders will begin accepting applications after the details are announced on March 4, 2009.

Q: What are the interest rate and other terms of this refinance offer?
A: The objective of the Homeowner Affordability and Stability Plan is to provide borrowers with a safe loan program with a fixed, affordable payment. All loans refinanced under the plan will have a 30 or 15 year term with a fixed interest rate. The rate will be based on market rates in effect at the time of the
refinance and any associated points and fees quoted by the lender. Interest rates may vary across
lenders and over time as market rates adjust. The refinanced loans will have no prepayment penalties or balloon notes.

Borrowers Who Are at Risk of Foreclosure:

Q: How do I know if I qualify for a payment reduction under the Homeowner Affordability and
Stability Plan?
A: In general, you may qualify for a mortgage modification if (a) you occupy your house as your primary residence; (b) your monthly mortgage payment is greater than 31% of your monthly gross income; and (c) your loan is not large enough to exceed current Fannie Mae and Freddie Mac loan limits. Final
eligibility will be determined by your mortgage lender based on your financial situation and detailed
guidelines that will be available on March 4, 2009.

Q: Do I need to be behind on my mortgage payments to be eligible for a modification?
A: No. Borrowers who are struggling to stay current on their mortgage payments may be eligible if their income is not sufficient to continue to make their mortgage payments and they are at risk of imminent default. This may be due to several factors, such as a loss of income, a significant increase in expenses, or an interest rate that will reset to an unaffordable level.

Q: I heard the government was providing a financial incentive to borrowers. Is that true?
A: Yes. To encourage borrowers who work hard to retain homeownership, the Homeowner Affordability and Stability Plan provides incentive payments as a borrower makes timely payments on the modified loan. The incentive will accrue on a monthly basis and will be applied directly to reduce your mortgage debt. Borrowers who pay on time for five years can have up to $5,000 applied to reduce their debt by the end of that period.

Q: My loan is scheduled for foreclosure soon. What should I do?
A: Contact your mortgage servicer or credit counselor. Many mortgage lenders have expressed their intention to postpone foreclosure sales on all mortgages that may qualify for the modification in order to allow sufficient time to evaluate the borrower’s eligibility. We support this effort.

Q: How much will a modification cost me?
A: There is no cost to borrowers for a modification under the Homeowner Affordability and Stability Plan. If you wish to get assistance from a HUD-approved housing counseling agency or are referred to a
counselor as a condition of the modification, you will not be charged a fee. Borrowers should beware of any organization that attempts to charge a fee for housing counseling or modification of a delinquent loan, especially if they require a fee in advance.