REALTORS® are pleased that the president has released the guidelines for refinancing and mortgage loan modifications and that the guidelines will be implemented immediately to help struggling homeowners, as well as millions of eligible homeowners who have stayed current in their mortgage payments.
"Housing stabilization must be the key component of any federal recovery plan. Helping families keep their homes is critical to this effort and for the health of our economy and communities across the country," said Charles McMillan, president of the National Association of REALTORS®.
"Many buyers are sitting on the fence and hesitant to take the plunge because of all the negative news about the economy. Programs like these will help homeowners and eventually bring financially healthy home buyers to the market," said Julia Keady, president of the Silicon Valley Association of REALTORS®.
The Obama administration's Making Home Affordable program aims to offer assistance to as many as seven to nine million homeowners by making their mortgages more affordable and helping to prevent foreclosures. There are two tiers to this program.
The first tier is the Home Affordable Refinance program, which will help homeowners who have a solid payment history on an existing mortgage owned by Fannie Mae or Freddie Mac. Normally, these borrowers would be unable to refinance because their homes have lost value, pushing their current loan-to-value ratios above 80 percent. Under the Home Affordable Refinance program, many of them will now be eligible to refinance their loan to take advantage of today's lower mortgage rates or to refinance an adjustable-rate mortgage into a more stable mortgage, such as a 30-year fixed rate loan.
GSE lenders and servicers already have much of the borrower's information on file, so documentation requirements are not likely to be burdensome. In some cases, an appraisal will not be necessary. This flexibility will make the refinance quicker and less costly for both borrowers and lenders. The Home Affordable Refinance program ends in June 2010.
The second tier is the Home Affordable Modification program, which will help up to three to four million at-risk homeowners avoid foreclosure by reducing monthly mortgage payments. Working with the banking and credit union regulators, the FHA, the VA, the USDA and the Federal Housing Finance Agency, the Treasury Department hopes these standards become the industry practice in pursuing affordable and sustainable mortgage modifications. This program will work in tandem with an expanded and improved Hope for Homeowners program.
The program encourages servicers to modify eligible mortgages under the modification program, so at-risk borrowers can better afford their payments. Eligibility and qualification for this program include:
• Loan was originated on or before January 1, 2009.
• First-lien loans on owner-occupied properties with unpaid principal balance up to $729,750. Higher limits allowed for owner-occupied properties with two to four units.
• All borrowers must fully document income, including signed IRS 4506-T, two most recent pay stubs and most recent tax return, and must sign an affidavit of financial hardship.
• Property owner occupancy status will be verified through borrower credit report and other documentation; no investor-owned, vacant, or condemned properties.
• Incentives to lenders and servicers to modify at-risk borrowers who have not yet missed payments when the servicer determines that the borrower is at imminent risk of default.
• Modifications can start from now until December 31, 2012; loans can be modified only once under the program.
For more details on loan modification program terms and procedures, and other aspects of the Making Home Affordable program, please visit, www.financialstability.gov.
The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.
Variations of this article have appeared in local area newspapers.
For further information, please email or call the SILVAR office at (408) 200-0100.