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The Kathy O'Neal Team

Real Estate in Chantilly Blog


April 4, 2009, marked the official start of the Making Home Affordable refinance programYou have heard about the federal government’s efforts to help improve the mortgage and housing situation.

Well, on April 4, 2009, the Making Home Affordable refinance program had its official start.

If you’d like to know more, here is some basic information and an idea on what to do next, if you want to dig a bit deeper.  Please use this as a starting point and not as “gospel.”  This is my understanding based on what I have learned so far.

One part of the thinking behind the program is to put aside declining home prices and get people into the program based on benefit to the applicant, as well as their payment history.   A projected 5 million participants are expected to be approved.

But there are eligibility criteria.  Let’s start with three requirements.

First, is your existing home loan backed by either Fannie Mae or Freddie Mac? As I understand it, this is requirement #1.  You can check by using Fannie and Freddie’s online service.  Start with the Fannie Mae site.   It has a bigger market share.  If you come up empty on that go to  Freddie Mac’s site but you will have to provide your social security number when you check here.

Second, you will need a good payment history during the last year. I understand that one “30 days late” payment will disqualify you from the program.  If you were less than 30 days late and paid the penalty fee, you should still be OK.

Third, the amount you owe on your mortgage can’t be more than 5% of your home’s value. The formula is (Mortgage Balance) / (Home Value).  For example,  if the quotient is greater than 1.05 then your loan-to-value exceeds 105%.  If this is the case, then you are not eligible for Making Home Affordable.

If you think you quality so far, here are a few other important details:

  1. If you didn’t pay mortgage insurance prior to refinancing, you won’t have to pay it after refinancing — even if your loan-to-value exceeds 80%.
  2. Income verification is required — and it does not matter if the original was a stated income loan.
  3. You can’t pay off second mortgages using the loan proceeds — they are subordinated.

These are not the only guidelines.  You will find more on the websites we have included above.  Some of the information can be a bit jargon-oriented, including the government’s fact sheet.  But don’t let that slow you down.  If this has been a problem, it is at least worth a look to see it this would be a possible solution.

So, start with the first step and check to see if your loan is a Fannie or Freddie backed mortgage.  Then, if you want to go further, but are unsure of what to do, you can contact your loan officer.  If you don’t have someone you have been working with, contact me and I will give you the names of several solid options, and I will answer any questions within my area of expertise.

Big point to remember:  the program is over on June 10, 2010.