Modifying Loans Under the Affordable Home Modification Plan‏

This will only apply to the first mortgage on your primary residence.

To qualify, you must:
Have originated your mortgage before Jan. 1, 2009.
Be an owner-occupant.
Have an unpaid balance that is equal to or less than $729,750 (for a single-family home).
Have trouble paying your mortgage due to financial hardship. That could be because you have had an increase in your mortgage payments, or because your income was reduced or you suffered a hardship (like medical problems) that increased your bills, or, you can show that you soon will be unable to make your payments. You will be required to enter an affidavit of financial hardship.
Your monthly mortgage payment must also be more than 31% of your gross (pre-tax) monthly income.To seal the deal, you must successfully complete a three-month trial period at the modified rate. If you make all payments on time, you will keep this lower rate that will be fixed for five years.

What if I am About to be Foreclosed On?
The foreclosure process will stop while you’re being considered for the program (or for any alternative foreclosure prevention option).

What Will it Cost?
Under the program, the borrower does not have to pay any charges or fees. Any fees are supposed to be paid by the company that holds the loan, and the servicer of the loan will pay for your credit report.

Is There a Deadline?
New borrowers will be accepted until Dec. 31, 2012.
How Do I Start?
Gather these required loan modification documents and call your mortgage servicer (the company you make payments to). Your servicer is not required to join the program, but the government hopes that the incentives, along with the fact that this could help millions avoid defaulting on their mortgage, will motivate them to participate.


Home Affordable Modification Program Guidelines

FULL DETAILS CLICK THE FOLLOWING LINK PRINT & REVIEW:

http://www.ustreas.gov/press/releases/reports/modification_program_guidelines.pdf

Reissuance of the Introduction of the Home Affordable Modification

This Announcement (09-05R) is a reissuance of Announcement 09-05, which was originally
issued on March 4, 2009. This Announcement provides additional policy clarification and
instruction and supersedes Announcement 09-05 in its entirety. Policy clarifications and
new instructions that are incorporated into this Announcement are identified by bold type.
(Other minor editorial changes are included in this document but not identified in bold.)
Background
On February 18, 2009, President Obama announced the Homeowner Affordability and Stability
Plan to help up to 7 to 9 million families restructure or refinance their mortgage loans to avoid
foreclosure. As part of this plan, the Treasury Department (Treasury) announced a national
modification program aimed at helping 3 to 4 million at-risk homeowners – both those who are
in default and those who are at imminent risk of default – by reducing monthly payments to
sustainable levels. Treasury issued uniform guidance for loan modifications across the mortgage
industry in Supplemental Directive 09-01 on April 6, 2009. This Announcement provides
guidance to Fannie Mae servicers for adoption and implementation of the Home Affordable
Modification Program (HMP) for Fannie Mae loans.
Under the HMP, servicers will use a uniform loan modification process to provide eligible
borrowers with sustainable monthly payments. The HMP implementation guidelines set forth in
this Announcement apply to all eligible one- to four-unit owner-occupied properties securing
Fannie Mae portfolio mortgage loans and MBS pool mortgage loans guaranteed by Fannie Mae.
The HMP will replace the Streamlined Modification Program introduced in Announcement 08-
33 and the Early Workout™ program announced in Announcement 08-31. The HMP will expire
on December 31, 2012.
All Fannie Mae-approved servicers must participate in the program for all eligible Fannie Mae
portfolio mortgage loans and MBS pool mortgage loans guaranteed by Fannie Mae.
Announcement 09-05R Page 2
Servicers may also elect to participate in the HMP for other qualifying mortgage loans that:
 are not subject to Fannie Mae’s credit loss guarantee, and
 are held by servicers in their own portfolios or are serviced for other portfolios or
securitization trusts or investors.
These other qualifying mortgage loans are referred to as Non-GSE Mortgages in this
Announcement.
As announced in Supplemental Directive 09-01, in order for a servicer to participate in the HMP
with respect to Non-GSE Mortgages, the servicer must execute a servicer participation
agreement and related documents with Fannie Mae in its capacity as financial agent for the
United States (as designated by Treasury).
This Announcement also introduces a new HomeSaver Forbearance™ foreclosure prevention
option and a new Fannie Mae loan workout hierarchy. The HomeSaver Forbearance provides an
additional foreclosure prevention option for borrowers who are NOT eligible for the HMP.
This Announcement covers the following topics:
 HMP Eligibility
 Underwriting
 Modification Process
 Servicer Delegation, Duties and Responsibilities
 Reporting Requirements
 Fees and Compensation
 FHA HOPE for Homeowners
 Compliance
 HomeSaver Forbearance
 New Workout Hierarchy
 Retirement of the Streamlined Modification Program (SMP) and the Early Workout Program

To read the entire document with detailed information please visit the link below:
https://www.efanniemae.com/sf/guides/ssg/annltrs/pdf/2009/0905.pdf

Freddie Mac Release a bulletin

Freddie Mac has issued the following Single Family Seller/Servicer Guide Update regarding Bulletin 2009-10
Today we issued Single-Family Seller/Servicer Guide Bulletin 2009-10, which announces important updates to requirements for the Home Affordable Modification program, including new criteria for determining whether a borrower is in imminent default, information and tools for Servicers to perform the required Net Present Value (NPV) test, and other changes to borrower eligibility and underwriting requirements.
Criteria for Determining Imminent Default
The Guide Bulletin provides criteria for determining whether a borrower who is current or less than 31days delinquent, and claims a hardship, is in imminent default. Using the process, requirements, and definitions outlined in our revised Guide Section C65.4, Servicers must consider the borrower for a modification under the Home Affordable Modification program if, after using the screening criteria outlined in this Guide section, the Servicer determines:
The borrower’s Debt Coverage Ratio is less than 1.20 and
The borrower’s cash reserves are less than three times the current monthly PITIA payment.
The Borrower Qualification Worksheet may be used to determine if a borrower, who is current or less than 31 days delinquent, is in imminent default. The updated Freddie Mac Borrower Qualification Worksheet will be available as a secure link on our Home Affordable Modification program Web page on Thursday, April 23. In addition, Freddie Mac is developing an automated solution to assist Servicers with the imminent default evaluation, and it will be available at a later date.
Net Present Value Calculations
All mortgages that meet Home Affordable Modification program criteria must be evaluated using the standardized NPV test that compares the NPV result for a modification to the NPV result for not modifying the mortgage. Today’s Bulletin and newly revised Guide Section C65.6 include detailed requirements for performing this test. These requirements include revisions for determining the amount of principal forbearance that may be permitted in order to achieve the Target Payment.
To assist Servicers, we are also introducing the Net Present Value (NPV) Calculator. The NPV Calculator is available on the Home Affordable Modification Servicer Web page. A user ID and password are required for access to the Servicer Web page. Servicers must complete and submit the HMP Registration Form to obtain a user ID and password.
Additional Updates
With today’s Bulletin, we are also announcing revisions and updates to these and other program requirements:
Revising requirements for verification of income when the Servicer uses stated income to create and send the borrower a Trial Period Plan, along with revising the income documentation requirements.
Revising the timeframe for when a borrower must respond to the Trial Period Plan offer package from 14 days to 30 days, and providing additional guidance if the borrower does not submit the required documents by the specified deadline.
Updating the definition of Interest Rate Cap.
Updating requirements for Servicers to continue to report “full-file” status reports to the four major credit repositories when borrowers enter the Trial Period, with criteria for borrowers who are current and borrowers who are delinquent when they enter the Trial Period.
Revising collateral valuation requirements used for the NPV test and for determining the mark-to-market LTV ratio.
Revising eligibility requirements to allow modifications of FHA, VA, and RHS mortgages, in accordance with guidance issued by the respective agency.
Revising documentation requirements for verifying that eligible mortgages are occupied primary residences.
Updating requirements for verifying installment debt and other expenses that must be included in the calculation of the borrower’s total monthly debt payment-to-income ratio.
Providing further guidance on the Servicer’s “Pay for Success” and Borrower’s “Pay for Performance” incentive fees.
Revising the Hardship Affidavit to now include a section for the collection of government monitoring data.
Adding requirements for reporting data to Fannie Mae in its capacity as Financial Agent.
Adding requirements provided by Freddie Mac, the Compliance Agent for the U.S Department of the Treasury.
Reminders
As a reminder, Servicers should continue to:
Suspend all foreclosure sales on owner-occupied properties for borrowers who may be or are eligible for a modification under the Home Affordable Modification program.
Report weekly Home Affordable Modification activity each Monday using the Program Performance Reporting Spreadsheet.

Please read the original bulletin: http://www.freddiemac.com/sell/guide/bulletins/pdf/bll0910.pdf

President Barack Obama's ambitious plan to rescue the housing market

At the heart of the President Barack Obama's ambitious plan to rescue the housing market is the conviction that restructuring distressed mortgages will keep struggling borrowers in their homes and help insert a floor beneath plummeting property values. With $75 billion dedicated to reworking troubled loans, that's a big bet—especially considering that a top banking regulator said last December that almost 53 percent of loans modified in the first quarter of 2008 went bad again within six months. But supporters argue that mortgage modifications need to be properly engineered to work—and many early ones weren't. To that end, the Obama administration on Wednesday unveiled fresh details on its plan to restructure at-risk loans and help as many as four million home owners avoid foreclosure. Here are seven things you need to know about Obama's loan modification program.
1. Payments, not prices: The plan centers on the belief that struggling borrowers will stay in their homes—even as values decline sharply—as long as they can make their monthly payments. Although not everyone agrees with this, billionaire investor Warren Buffett endorsed the philosophy in his most recent letter to shareholders. "Commentary about the current housing crisis often ignores the crucial fact that most foreclosures do not occur because a house is worth less than its mortgage (so-called “upside-down” loans)," Buffett wrote. "Rather, foreclosures take place because borrowers can’t pay the monthly payment that they agreed to pay."
2. Thirty-one percent: To that end, the administration's plan requires participating loan servicers to reduce monthly payments to no more than 38 percent of the borrower's gross monthly income. The government would then chip in to bring payments down further, to no more than 31 percent of the borrower's monthly income. In lowering the payment, the servicer would first reduce the interest rate to as low as 2 percent. If that's not enough to hit the 31 percent threshold, they would then extend the terms of the loan to up to 40 years. If that's still not enough, the servicer would forebear loan principal at no interest. The plan does not, however, require servicers to reduce mortgage principal, which Richard Green, the director of the Lusk Center for Real Estate at USC, considers a shortcoming. "For underwater loans, if you don't write down the balance to be less than the value of the house, people still have an incentive to default," Green says. "Writing down the principal first instead of last—which is what [the Obama administration is] proposing—makes sense to me."
3. Cash incentives: To encourage participation, servicers will be paid $1,000 for each modification and will get an additional $1,000 payout each year for as many as three years, as long as the borrower continues making payments. Borrowers, meanwhile, can get up to $1,000 knocked off the principal of their loan each year for as many as five years if they make their payments on time. Neither party can receive the cash incentives until the modified loan payments have been made for at least three months.
4. Financial hardship: The Obama administration is pitching its plan as an effort to help responsible homeowners ensnared in the historic housing slump and painful recession—not speculators. As such, only owner-occupied, primary residences with outstanding principal balances of up to $729,750 are eligible. Occupancy status will be verified through documents, such as the borrower's credit report. In addition, the program is designed to target homeowners who are undergoing "serious hardships"—such as a loss of income—which have put them at risk of default. To participate, borrowers will have to sign an affidavit of financial hardship and verify their income with documents. "If we would have had such stringent verification over the last four or five years, we probably wouldn't be in as bad a position as we are in," says Richard Moody, the chief economist at Mission Residential. But while Moody has no objection to such verification, obtaining documents from so many homeowners could be an onerous effort. "It's going to be a very time-consuming process," he says. Only loans originated on or before Jan. 1, 2009, are eligible, and modified payments will remain in place for five years. Now that the administration's plan is out, lenders are free to begin modifying loans.
5. Net present value: To determine if a particular mortgage will be modified, the servicer will perform a so-called net present value test. The test compares the expected cash flow that the loan would generate if it is modified with the expected cash flow it would generate if it isn't. If the modified loan is expected to produce more cash flow for the mortgage holder, the servicer is to restructure the loan.
6. Second liensThe Obama plan also addresses the issue of second liens—such as home equity loans or home equity lines of credit—by offering incentives to extinguish them. But key details on this component of the plan remained unclear.
7. Will it work? Moody argues that while the plan may reduce foreclosures for primary residences, it could lead to a spike in defaults for another group of homeowners. Although he supports the administration's efforts to focus the initiative on primary residences, Moody notes that "it could be the case that a lot of [real estate speculators] have been just hanging on waiting to see exactly what the details are of this [plan]," Moody says. Now that it's clear the Obama plan leaves speculators out, "we could actually see a spike in foreclosures or at least mortgage defaults among this group."