Details and eligibility requirements of the 'Making Home Affordable' program

March 4, 2009
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The Obama administration launched what it calls the "Making Home Affordable" initiative today: a $75 billion loan modification program, which runs through 2012.

Here are the highlights:

• Mortgages for single-family properties that are worth more than $729,750 are excluded.

• Interest rates can be lowered to as low as 2 percent and then if necessary, the term of the loan can be extended to a maximum of 40 years.

• The home must be a primary residence (verified with tax return, credit report, and other documentation such as a utility bill). The home may not be investor-owned.

• The home may not be vacant or condemned.

• Borrowers must provide their most recent tax return and two pay stubs, as well as an "affidavit of financial hardship" to qualify.

• Borrowers in bankruptcy are not automatically eliminated from consideration for a modification.

• Borrowers in active litigation regarding the mortgage loan can qualify for a modification without waiving their legal rights.

• Borrowers are only allowed to have their loans modified once, and the program only applies for loans made on Jan. 1, 2009 or earlier.

• Eligibility is restricted to loans originated on or before Jan. 1, 2009.

• Incentives are provided to extinguish second liens on loans modified under the program.

• Homeowners are eligible for up to $1,000 of principal reduction payments each year for up to five years.

• Separately, up to 5 million borrowers who have mortgages held by government controlled mortgage finance giants Fannie Mae and Freddie Mac should be eligible to refinance through June 2010.

(Source: Boston Globe; wire services; and the US Treasury website.)

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