Finding Relief in the Stimulus Package
President Obama’s new “Making Home Affordable” program is intended to help up to 9 million borrowers stay in their homes. Launched on March 5, the plan will encourage lenders to modify loan terms or refinance homeowners into more affordable fixed-rate loans, rather than allow the property to go into foreclosure. Not every homeowner with a mortgage will qualify for refinancing or loan restructuring, so it’s important to get all the information.

Who qualifies for refinancing?

• Your loan must be held by Fannie Mae or Freddie Mac. Find out who holds your loan by contacting your current lender or mortgage servicer.
• You must be in “good standing,” meaning that you are current on your payments.
• The property in question must be owner-occupied.
• You must have sufficient income to pay the new mortgage amount.
• You can’t owe more than 125% of your home’s current value on your first mortgage.
  

Who qualifies for loan modification?

• If you are currently behind on your mortgage payments or at risk of falling behind soon, you are eligible for loan modification.
• Your must have purchased your home on or before January 1, 2009, and it must be your primary residence.
• The mortgage payment (including taxes, insurance and dues to a condo association) must amount to more than 31% of your gross monthly income.
  

What documents do I need to be considered for a Loan Modification or Refinance?

In order to be considered for a Loan Modification or Refinance, you’ll need to provide some information. Be sure you have the following documents/information with you when you meet with a Loan Modification professional. You should also fill in and take with you our Budget Worksheet. Your advisor will need to know about:

1. Your first mortgage, so have your monthly mortgage statement available. Also bring recent statements for homeowners’ or condo-association fees, if applicable.
   
   
2. The before-tax (gross) income of your household. You’ll need recent pay stubs, for example, or a profit-and-loss statement if you’re self-employed. Provide any documents that your advisor will need to get a clear idea of your pretax income—this will help him or her determine a manageable new monthly payment.
   
   
3. Your most recent W-2 and tax return. Property taxes can be a significant expense, so have your property-tax bill handy as well.
   
   
4. Your savings and assets. Have with you statements from your credit union, bank or investment firm showing recent balances on savings accounts, money markets, investments, etc.
   
   
5. Second mortgages, home equity loans or lines of credit on your home.
   
   
6. Your credit card debt. Bring along your most recent statements showing the balance due and the minimum monthly payments for each credit card you have.
   
   
7. Other debt. You’ll need to provide documentation for any other debts you have, such as student loans, car payments, etc.
   
   
8. Your circumstances. Most mortgage lenders require that any homeowner facing foreclosure write a statement detailing the financial problems that are or could be contributing to the foreclosure. These may include job loss, accident or illness, divorce, etc. Bring with you a completed Hardship Affidavit.
   

If you feel you need to speak with a Loan Modification or Refinance advisor, you can call DFI Home Ownership Counseling at 877-894-4663.

If you qualify for a loan modification, your lender can agree to reduce your payments to no more than 38% of your monthly income. Additional assistance from the government will further reduce your payments to no more than 31% of your monthly income. The program runs through the end of 2012, but borrowers will only be able to modify their loans one time.

If you’re having difficulty with a GHCU mortgage, please contact us immediately. While we’re still learning all the details of this very complicated plan, we want to use the legislation to benefit our members any way we can. For help, please call us at 206-298-9394 or 800-562-5515.

If your mortgage is not with GHCU, but you feel you are eligible for either program, contact your mortgage servicer for more information. You can also read “Help for Homeowners” on the White House Blog. Both the refinancing and the modification programs went into effect on March 4, so it may be possible to get relief quickly.