The Fed's New Plan to Help Struggling Homeowners: Do You Qualify for Help?

By: Alicia Schuller, Marketing Coordinator, NHS of Baltimore

On March 4, 2009 the Federal Government announced a plan to help struggling homeowners stay in their homes and avoid foreclosure. There is a lot stuff floating around out there about the guidelines and rules of the legislation, as well as who is eligible for help and who isn't.

As a homeowner, you need to know there are two facets to this legislation. 1.)The Home Affordable Refinance and 2.) The Home Affordable Modification. These were put in place to help homeowners who are either under water with their mortgages (their mortgage is worth more than the property), or who were victims of predatory lending and ended up with a bad loan with re-adjustable arms.

Eligibility (as laid out by the U.S. Department of the Treasury's Summary of Guidelines)

- loan was originated on or before January 1, 2009
- first-lien loans on owner-occupied properties with unpaid principal balance up to $729,750
- higher limits allowed for owner-occupied properties with 2-4 units
-all borrowers must fully document income, including signed IRS 4506-T, two most recent pay stubs, most recent tax return, and must sign an affidavit of financial hardship
- property owner occupancy status will be verified through borrower credit report and other documentation; no investor-owned, vacant, or condemned properties
-incentives to lenders and servicers to modify at risk borrowers who have not yet missed payments, when the servicer determines that the borrower is at imminent risk of default
-modifications can start from now until December 31, 2012; loans can be modified only once under the program