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The Making Home Affordable Program Deciphered

Why was the Making Home Affordable program created? The Making Home Affordable program was created by the Obama administration to help families who could benefit from a lower mortgage payment but until now have not been able to refinance or modify existing loans because of declining property values.

Who is eligible for the Making Home Affordable refinance option? Homeowners whose loans are owned or securitized by Fannie Mae or Freddie Mac. Homeowners must be current on their mortgage payments and have sufficient income to support the new mortgage payments.

Additional Qualifiers:

• Loan-to-value (LTV) ratio may be as high as 105 percent of the property’s value, with specific flexibility regarding mortgage insurance (MI) coverage for loans with LTVs above 80 percent.
  
  
• Loans for primary residence, second home and investment properties are eligible.
  
  
• Conforming and jumbo conforming loans are eligible.
  
  

What is not allowed? No subordinate financing in the form of a home equity line of credit or a closed-end second mortgage may be satisfied with the proceeds of the refinanced mortgage.

What is allowed? Fully-amortizing fixed-rate mortgage loans with terms up to 40 years are available as well as fully-amortizing adjustable rate mortgage (ARM) loans with an initial fixed period of five years or greater with a term up to 40 years. Limited cash-out refinances are allowed but differ between Fannie Mae and Freddie Mac.

• Fannie Mae: Borrowers may finance eligible closing costs and receive cash back at closing up to the lesser of 2 percent of the loan amount or $2,000.
  
  
• Freddie Mac: Borrowers may roll $2,500 of closing costs, financing and prepaids/escrows into the new loan.
  
  

How do I find out if my customer is eligible? To find out if your customer’s loan qualifies, you or your borrower can call or visit:

• Fannie Mae: Visit their website or call 1-(800)-7FANNIE (8:00 a.m.– 8:00 p.m. Eastern)
  
  
• Freddie Mac: Visit their website or call 1-(800)-FREDDIE (8:00 a.m.–8:00 p.m. Eastern)
  
  
• Making Home Affordable: Visit their website
  
  

Can I refinance the loan if my bank is not the original servicer? Fannie Mae serviced loans may be refinanced through the original servicer or through any lender who is a seller/servicer of Fannie. Freddie Mac loans may only be refinanced by the original Freddie Mac seller/servicer.

When does the program expire? June 10, 2010

Where can I find more information?

• Direct Sellers/Servicers of Fannie Mae can refer to Announcement 09-04 for more information.
  
  
• Direct Sellers/Servicers of Freddie Mac can refer to the March 4, 2009 Single-Family Seller/Servicer Guide Bulletin 2009-5.
  
  
• If you sell your loans through a seller/servicer of either Fannie or Freddie, contact the servicer of the mortgage loan for detailed information.
  
  
• Visit the U.S. Department of the Treasury website for an updated detailed Making Home Affordable program description (released on March 4, 2009).