Buried somewhere in President Obama’s stimulus package is $75 billion to help Americans buy homes or stay in the ones they own. It’s called the Homeowner Affordability and Stability Plan, and the White House expects it to offer aide to some 9 million people.
Where do I start?
According to Rick Williams, CEO of Home Ownership Center of Greater Cincinnati, the Homeowner Affordability and Stability Plan (sorry, no catchy acronym yet) can be broken down into three main components: help for rehabilitating lender-owned foreclosed properties, aid for people seeking to purchase foreclosed properties and assistance for homeowners facing foreclosure or seeking to refinance or secure a loan modification. Williams says most people are focusing on the last prong, avoiding foreclosure.
Step one is finding out if you’re eligible for some kind of assistance. To qualify, your mortgage must be owned by Fannie Mae or Freddie Mac.
If you think this rules you out because you don’t deal with either government entity, check anyway. Your lender might have sold your mortgage to one of these agencies. Log on to www.makinghomeaffordable.gov to check your loan — from the home page, click on “Loan Look Up.”
If the results come back positive for Freddie or Fannie, you next want to find out if you’re eligible. The Making Home Affordable Web site allows you to enter your data and discern if you should pursue a loan modification or refinancing.
Finally, since the program is voluntary for lenders, find out if your bank is participating. Once you’ve made it past this step, it’s probably best to contact a Housing and Urban Development (HUD) approved housing counseling agency.
Beware of scam artists, Williams warns: “You should not pay for this service!” HUD-approved agencies should provide housing counselors and assistance at no cost.
Be sure to bring all the correct documents when you meet with a counselor.
Here are some of the things you might need: copies of pay stubs and/or proof of income for the past two months for all borrowers, copies of all bank account statements for the past two months for all borrowers, proof of insurance and taxes, your loan number and documents that show you’re facing hardship (i.e. medical documentation, unemployment verification, etc.).
If foreclosure proceedings have already begun, it’s important to act fast.
“Help is available,” says Sister Barbara Busch, executive director of Working In Neighborhoods. “The sooner that they come the better off we are … looking at possibilities.”
Busch says the process is slow but worthwhile: “You can be quite successful if you stick with it and stick with a housing counseling agency.”
Working In Neighborhoods has been able to fix loans for about 65 percent of its clients, she says, helping them stay in their homes.
Going through a HUD-approved agency is smart because case workers know whom to contact. Busch says homeowners working solo often end up talking to collection agents instead of those in loss mitigation — a counselor might be able to get you a better deal.
Your counselor will look at your budget, what you can afford to pay and what hardships you’re facing. Then he/she will help you present a case and come up with some alternatives and options that you can ask for instead of waiting for the financial institution or servicer to give you a solution.
“(The lender) may very well give you the easiest solution possible,” Busch says, “and there are often things that we can help you negotiate for that wouldn’t necessarily be offered to you right away.”
She points out that the stimulus bill doesn’t mean lenders will be sending any money your way. But the government is providing hefty incentives for lenders to assist homeowners caught in bad situations.
Another advantage, Busch says, is that homeowners can get help before becoming delinquent on their payments — that wasn’t the case previously. She also notes that some investors are offering assistance even if you don’t qualify under the Housing Affordability and Stability Plan.
Refinance, modify, buy or sell?
Homeowners who make their mortgage payments on time but haven’t been able to refinance in order to get a better rate — perhaps because their home’s value has dropped — might now be eligible under the Home Affordable Refinance.
Those who are struggling to meet their bills and make mortgage payments due to a loss of income or an interest rate hike could qualify for a loan modification called Home Affordable Modification. The Making Home Affordable Web site offers two easy surveys to help you determine in which category you belong.
This is a buyer’s market, and the Homeowner Stability and Affordability Plan offers assistance to those looking to purchase homes.
For starters, there’s an $8,000 tax credit for first-time homebuyers. As long as you stay in the home for three years, there is no repayment requirement. People who buy homes between Jan. 1, 2009 and Dec. 1, 2009 can qualify for the credit.
You’ll likely get more house for your money right now. But if you’re considering a foreclosed property, be sure to have it thoroughly inspected so you don’t end up dealing with costly problems and repairs.
As you begin to wade into the process of modifying, refinancing or purchasing, pack your patience. Lenders and housing counseling agencies are being swamped, so it might take extra time to get answers. Obama’s plan is vast, and worried homeowners and homebuyers have lots of questions.
The U.S. Treasury Department’s Financial Stability Web site (www.financialstability.gov) can be a little confusing, but it does have links to a wealth of information. Click on the “Road to Stability” tab and choose “Making Home Affordable” — that’s where you’ll find a fact sheet and several other good documents.
This section also includes a list of HUD-approved housing and counseling agencies to help you get started. The FAQ section at www.makinghomeaffordable.gov is handy as well. ©