Congress recently passed the Homeowner Affordability and Stability Plan (“the Plan”), which provides various options for homeowners who are feeling the pressure of their monthly mortgage payments in the midst of job losses and rapidly falling home values. One of these options is a federally regulated loan modification program that gives certain incentives to mortgage loan servicers and homeowners for participation in the program; a loan modification changes the terms of the mortgage loan based on the Plan’s regulations so that a homeowner can better afford the payments and avoid the risk of foreclosure.
The Plan also contains a Home Affordable Refinance program, which allows certain homeowners to refinance their mortgage loans. Typically, loan servicers will not permit refinancing where a homeowner has less than 80% equity in his or her home, which has become more and more common as home values have declined in the current recession. Under the Refinance program, however, even homeowners who have less equity may be able to refinance into fixed rate mortgage loans that take advantage of the historically low interest rates.
Participation by mortgage loan servicers in each of these programs is voluntary, so if you are interested in either program, you’ll need to make sure that your loan servicer has signed a contract with the government in order to participate in the program. You can do this by checking the list of participating loan servicers online at
www.financialstability.gov, or by contacting your loan servicer directly.
