March 30th, 2009 
Vijaianand 
On Feb 18, 2009, Obama Administration introduced the Homeowner Affordability and Stability(HAS) Plan. It is designed in a motive to bring relief to homeowners struggling with their mortgage payments and to help prevent the negative effects of foreclosures on neighborhoods and communities.
As part of this plan, the U.S. Treasury Department has outlined a detail loan modification process to reduce the mortgage payments for at-risk customers and announced the plan details on Mar 4, 2009.
Here are some details about the Home Affordable Modification (HMP) program.
- Mortgage loans originated on or before January 1, 2009, are eligible for the HMP program, and the amount owed on the loan must be less than or equal to $729,750.
- The program applies only to the primary residence. It does not apply to second homes or investment properties, and the house cannot be vacant or condemned.
- To be considered for a loan modification under this program, homeowners are required to provide a hardship affidavit and proof of income.
- Participating servicers and lenders must lower interest rates, extend loan terms, and/or forbear principal to reduce a customer’s mortgage payment. If the servicer or lender cuts the payment to 38% of the household’s monthly gross income, the Treasury Department will share the cost to further reduce the payment to 31%.
- Eligible borrower must complete a 90-day trial modification period at the new interest rate and payment. If the customer is current at the end of the trial period, the servicer or lender will execute a permanent modification agreement.
- The Treasury Department will pay servicers and lenders $1,000 for every loan modified under the program and another $1,000 a year for up to three years if the homeowner remains current on the loan.
- Customers who make timely mortgage payments will also receive $1,000 a year for up to five years. This money must go toward reducing the principal balance on the loan.
- Incentive payments will only be made after the customer successfully completes the trial period.
- Loans can only be modified once under the program; redefaulting loans will be terminated from the program, and no additional incentive payments will be made.
- Participating servicers and lenders are required to service all eligible loans under the program’s guidelines unless explicitly prohibited by existing investor contracts.
Vijai’s 2cents: Is HAS Plan really helpful?
There is always 2 sides to a story. On one side many are echoing, Home Affordable Modification program will help stabilize the housing and mortgage industries by making mortgage payments affordable for distressed homeownwers in a optimistic tone.
But on the other side they think it is just a short term solution and it is going to get the customer/borrower after 5 year modification period. It is not a true solution to help borrowers. Also not may homeowners who bought their house rightly and paying right on time are happy about the notion slackers are getting help.
Check out this article which found on the net talking about different views.
http://seekingalpha.com/article/124736-obama-s-homeowner-stability-plan-how-helpful-will-it-be
HAS Program Tools
If you want to know whether you are eligible for loan mod or refinance option thru this program, check out this website http://wwww.homeaffordplan.com and it will give the result.
Other websites to check are,
http://www.making-home-affordable.com
http://www.financialstability.gov
What do you think about this HAS Plan? Share your thoughts as comments.
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