Home Affordability Initiative Expires December 31, 2009

The Treasury Department along with the White House released the details on the new “Home Affordability” initiatives.
The refinancing program will allow an estimated 4-5 million borrowers with Fannie Mae or Freddie Mac loans to refinance into new 30-year loans at the current market rates.

First, homeowners will need to verify that either Fannie Mae or Freddie Mac actually holds the mortgage, by calling their mortgage servicer.
Beginning immediately, Fannie Mae and Freddie Mac can provide the following:
• Refinancing without requiring new mortgage insurance - normally mandatory for loans with less than 20 percent equity
• Maximum loan-to-value ratios up to 105 percent
Maximum mortgage amounts as high as $730,000

The second program, called “Home Affordability Modification” is provided to restructure 3-4 million seriously delinquent mortgages - those loans which would go to foreclosure this year and which meet the following criteria:
• Loans that closed prior to January 1, 2009
• Homeowners must agree to work with their servicer to make on-time payments at a reduced rate
• Under this program, loan servicers who help troubled homeowners, by reducing payments to no more than 38% of their monthly income, will receive matching government funds to reduce payments even further to 31% of monthly household income. To accomplish this, interest rates on some loans could go to as low as 2%, length of the loans extended to as long as 40 years, and loan balances could be reduced as well.