DSKim Blog

The Homeowner Affordability and Stability Plan

A part of American Recovery and Reinvestment Act of 2009

   The Homeowner Affordability and Stability plan is officially ON now and more details were publicized by the U.S. Department of the Treasury today, on March 04, 2009. Amongst all the rapid changes and all the big news in the financial sector including H4H, Citicorp and AIG etc., we need to focus on what this really means to me and you.

   The HASP has two parts, Refinance and Modification. The Home Affordable Refinance part is for the homeowners with solid payment history. The other part is the Home Affordable Modification for at-risk homeowners.

Refinance Facts

• Will lower the interest rate for an existing mortgage owned by Fannie Mae or Freddie Mac
• Will benefit 4 to 5 million homeowners
• Must have solid payment history (no late payment during the last 12 month)
• Loan up to 105% of the house value
• This program ends in June 2010
• It may not need an appraisal since it is an existing loan

Modification Facts

• Will help 3 to 4 million at-risk homeowners
• First lien only that was originated before 2009
• Loan amount limit is $729,750
• Modification starts now until December 31, 2012
• Loan can be modified only once
• Documents needed are; two pay stubs, most recent tax return and affidavit of financial hardship
• The modified payment should not exceed 31% of gross income and can go up to 40 years
• Participating servicers are required to service all eligible loans under the rules of program
• Servicers must enter into this program before December 31, 2009
• Numerous incentives for the servicers and borrowers

   Unfortunately for the appraisers, it is stated that "an appraisal will not be necessary on some cases",... may be on all cases. This is to speed up the process and sounded like as if the appraisal process was the reason for the delay, not the other lengthy process of the servicer. Anyway, it surely does not "create jobs" for appraisers, instead, create risks.

Beware of Rescue Scams

• NO FEES ARE REQUIRED to get assistance or information about Making Home Affordable from your lender or a HUD-approved housing counselor.
• Do not pay the fee in advance for the service to NO ONE
• Do not hand over the signed deed to others except mortgage company
• Never make your mortgage payments to anyone other than your mortgage company

   As I have mentioned in the previous post, the lender is required to service all eligible loans and to use a NPV(Net Present Value) test on at-risk loans and notify the homeowner. However, it is best to check with your lender in few weeks and ask about this program. I have gathered some useful links for contacts and more information about this program.

• HUD Approved Housing Counseling Agencies http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm
• Government Site http://www.financialstability.gov/
• Contact your Mortgage Company http://www.hopenow.com/
• H4H (Hope for Homeowners) http://portal.hud.gov/portal/page?_pageid=73,7601299&_dad=portal&_schema=PORTAL