Help for homeowners

The President's strategy for economic recovery is a stool with several legs,
as he's said, and one of them is solving the foreclosure crisis.

"We must stem the spread of foreclosures and falling home values for all
Americans, and do everything we can to help responsible homeowners stay in
their homes," he said yesterday as he signed the American Recovery and
Reinvestment Act into law.

Though communities across the country have been affected by the crisis,
Arizona has been hit particularly hard -- in 2008, only two states had more
foreclosures.

And President Obama is there today, in Phoenix, to unveil his "Homeowner
Affordability and Stability Plan," which will help bring relief to
homeowners and bring some order to the housing market.

The President will talk more about his plan a little later today. In the
meantime, we're sure you have a lot of questions, like, Am I eligible for
assistance? Might I be able to modify my loan? When do I apply? We've put
together an example sheet that will show you
ht=220&width=370&inlineId=tb_external> what options might be available to
you, depending on the circumstances of your mortgage, as well as answers to
some common questions (below).

Questions and Answers for Borrowers about the
Homeowner Affordability and Stability Plan

Borrowers Who Are Current on Their Mortgage Are Asking:

* What help is available for borrowers who stay current on their
mortgage payments but have seen their homes decrease in value?

Under the Homeowner Affordability and Stability Plan, eligible borrowers who
stay current on their mortgages but have been unable to refinance to lower
their interest rates because their homes have decreased in value, may now
have the opportunity to refinance into a 30 or 15 year, fixed rate loan.
Through the program, Fannie Mae and Freddie Mac will allow the refinancing
of mortgage loans that they hold in their portfolios or that they placed in
mortgage backed securities.

* I owe more than my property is worth, do I still qualify to
refinance under the Homeowner Affordability and Stability Plan?

Eligible loans will now include those where the new first mortgage
(including any refinancing costs) will not exceed 105% of the current market
value of the property. For example, if your property is worth $200,000 but
you owe $210,000 or less you may qualify. The current value of your
property will be determined after you apply to refinance.

* How do I know if I am eligible?

Complete eligibility details will be announced on March 4th when the program
starts. The criteria for eligibility will include having sufficient income
to make the new payment and an acceptable mortgage payment history. The
program is limited to loans held or securitized by Fannie Mae or Freddie
Mac.

* I have both a first and a second mortgage. Do I still qualify to
refinance under the Homeowner Affordability and Stability Plan?

As long as the amount due on the first mortgage is less than 105% of the
value of the property, borrowers with more than one mortgage may be eligible
to refinance under the Homeowner Affordability and Stability Plan. Your
eligibility will depend, in part, on agreement by the lender that has your
second mortgage to remain in a second position, and on your ability to meet
the new payment terms on the first mortgage.

* Will refinancing lower my payments?

The objective of the Homeowner Affordability and Stability Plan is to
provide creditworthy borrowers who have shown a commitment to paying their
mortgage with affordable payments that are sustainable for the life of the
loan. Borrowers whose mortgage interest rates are much higher than the
current market rate should see an immediate reduction in their payments.
Borrowers who are paying interest only, or who have a low introductory rate
that will increase in the future, may not see their current payment go down
if they refinance to a fixed rate. These borrowers, however, could save a
great deal over the life of the loan. When you submit a loan application,
your lender will give you a "Good Faith Estimate" that includes your new
interest rate, mortgage payment and the amount that you will pay over the
life of the loan. Compare this to your current loan terms. If it is not an
improvement, a refinancing may not be right for you.

* What are the interest rate and other terms of this refinance offer?

The objective of the Homeowner Affordability and Stability Plan is to
provide borrowers with a safe loan program with a fixed, affordable payment.
All loans refinanced under the plan will have a 30 or 15 year term with a
fixed interest rate. The rate will be based on market rates in effect at
the time of the refinance and any associated points and fees quoted by the
lender. Interest rates may vary across lenders and over time as market
rates adjust. The refinanced loans will have no prepayment penalties or
balloon notes.

* Will refinancing reduce the amount that I owe on my loan?

No. The objective of the Homeowner Affordability and Stability Plan is to
help borrowers refinance into safer, more affordable fixed rate loans.
Refinancing will not reduce the amount you owe to the first mortgage holder
or any other debt you owe. However, by reducing the interest rate,
refinancing should save you money by reducing the amount of interest that
you repay over the life of the loan.

* How do I know if my loan is owned or has been securitized by Fannie
Mae or Freddie Mac?

To determine if your loan is owned or has been securitized by Fannie Mae or
Freddie Mac and is eligible to be refinanced, you should contact your
mortgage lender after March 4, 2009.

* When can I apply?

Mortgage lenders will begin accepting applications after the details of the
program are announced on March 4, 2009.

* What should I do in the meantime?

You should gather the information that you will need to provide to your
lender after March 4, when the refinance program becomes available. This
includes:

* information about the gross monthly income of all borrowers,
including your most recent pay stubs if you receive them or documentation of
income you receive from other sources
* your most recent income tax return
* information about any second mortgage on the house
* payments on each of your credit cards if you are carrying balances
from month to month, and
* payments on other loans such as student loans and car loans.

Borrowers Who Are at Risk of Foreclosure Are Asking:

* What help is available for borrowers who are at risk of foreclosure
either because they are behind on their mortgage or are struggling to make
the payments?

The Homeowner Affordability and Stability Plan offers help to borrowers who
are already behind on their mortgage payments or who are struggling to keep
their loans current. By providing mortgage lenders with financial
incentives to modify existing first mortgages, the Treasury hopes to help as
many as 3 to 4 million homeowners avoid foreclosure regardless of who owns
or services the mortgage.

* Do I need to be behind on my mortgage payments to be eligible for a
modification?

No. Borrowers who are struggling to stay current on their mortgage payments
may be eligible if their income is not sufficient to continue to make their
mortgage payments and they are at risk of imminent default. This may be due
to several factors, such as a loss of income, a significant increase in
expenses, or an interest rate that will reset to an unaffordable level.

* How do I know if I qualify for a payment reduction under the
Homeowner Affordability and Stability Plan?

In general, you may qualify for a mortgage modification if (a) you occupy
your house as your primary residence; (b) your monthly mortgage payment is
greater than 31% of your monthly gross income; and (c) your loan is not
large enough to exceed current Fannie Mae and Freddie Mac loan limits.
Final eligibility will be determined by your mortgage lender based on your
financial situation and detailed guidelines that will be available on March
4, 2009.

* I do not live in the house that secures the mortgage I'd like to
modify. Is this mortgage eligible for the Homeowner Affordability and
Stability Plan?

No. For example, if you own a house that you use as a vacation home or that
you rent out to tenants, the mortgage on that house is not eligible. If you
used to live in the home but you moved out, the mortgage is not eligible.
Only the mortgage on your primary residence is eligible. The mortgage
lender will check to see if the dwelling is your primary residence.

* I have a mortgage on a duplex. I live in one unit and rent the
other. Will I still be eligible?

Yes. Mortgages on 2, 3 and 4 unit properties are eligible as long as you
live in one unit as your primary residence.

* I have two mortgages. Will the Homeowner Affordability and
Stability Plan reduce the payments on both?

Only the first mortgage is eligible for a modification.

* I owe more than my house is worth. Will the Homeowner Affordability
and Stability Plan reduce what I owe?

The primary objective of the Homeowner Affordability and Stability Plan is
to help borrowers avoid foreclosure by modifying troubled loans to achieve a
payment the borrower can afford. Lenders are likely to lower payments
mainly by reducing loan interest rates. However, the program offers
incentives for principal reductions and at your lender's discretion
modifications may include upfront reductions of loan principal.

* I heard the government was providing a financial incentive to
borrowers. Is that true?

Yes. To encourage borrowers who work hard to retain homeownership, the
Homeowner Affordability and Stability Plan provides incentive payments as a
borrower makes timely payments on the modified loan. The incentive will
accrue on a monthly basis and will be applied directly to reduce your
mortgage debt. Borrowers who pay on time for five years can have up to
$5,000 applied to reduce their debt by the end of that period.

* How much will a modification cost me?

There is no cost to borrowers for a modification under the Homeowner
Affordability and Stability Plan. If you wish to get assistance from a
HUD-approved housing counseling agency or are referred to a counselor as a
condition of the modification, you will not be charged a fee. Borrowers
should beware of any organization that attempts to charge a fee for housing
counseling or modification of a delinquent loan, especially if they require
a fee in advance.

* Is my lender required to modify my loan?

No. Mortgage lenders participate in the program on a voluntary basis and
loans are evaluated for modification on a case-by-case basis. But the
government is offering substantial incentives and it is expected that most
major lenders will participate.

* I'm already working with my lender / housing counselor on a loan
workout. Can I still be considered for the Homeowner Affordability and
Stability Plan?

Ask your lender or counselor to be considered under the Homeowner
Affordability and Stability Plan.

* How do I apply for a modification under the Homeowner Affordability
and Stability Plan?

You may not need to do anything at this time. Most mortgage lenders will
evaluate loans in their portfolio to identify borrowers who may meet the
eligibility criteria. After March 4 they will send letters to potentially
eligible homeowners, a process that may take several weeks. If you think
you qualify for a modification and do not receive a letter within several
weeks, contact your mortgage servicer or a HUD-approved housing counselor.
Please be aware that servicers and counseling agencies are expected to
receive an extraordinary number of calls about this program.

* What should I do in the meantime?

You should gather the information that you will need to provide to your
lender on or after March 4, when the modification program becomes available.
This includes

* information about the monthly gross income of your household
including recent pay stubs if you receive them or documentation of income
you receive from other sources
* your most recent income tax return
* information about any second mortgage on the house
* payments on each of your credit cards if you are carrying balances
from month to month, and
* payments on other loans such as student loans and car loans.



* My loan is scheduled for foreclosure soon. What should I do?

Contact your mortgage servicer or credit counselor. Many mortgage lenders
have expressed their intention to postpone foreclosure sales on all
mortgages that may qualify for the modification in order to allow sufficient
time to evaluate the borrower's eligibility. We support this effort.