Making Home Affordable
Program: Key Components
On February 18, 2009, President Obama announced his housing plan designed to help 7 to 9 million families avoid
foreclosure by refinancing or modifying their mortgages. The plan also
strengthens the federal commitment to Fannie Mae and Freddie Mac (the government
sponsored enterprises, or GSEs).
On March 4, 2009, the
administration released detailed guidance on the Making Home Affordable Program.
Here are the key elements of the Obama plan:
1. The
Home Affordable Refinance Program. Under this program, eligible
borrowers may refinance loans that Fannie Mae or Freddie Mac (the government
sponsored enterprises, or GSEs) own or guarantee. The program can help
homeowner-occupants who are current in making loan payments and have
loan-to-value ratios (LTVs) above 80 percent but not more than 105 percent.
Cash out refinancings are not permitted. The program ends in June 2010.
2. The Home Affordable
Modification Program. This is a $75 billion program with lender,
servicer, investor, and borrower incentives to make it work. The program is
limited to homeowner-occupants who are at risk of default or already in default
and who have loans at or below the maximum GSE conforming loan limit of $729,750
(or higher for 2-, 3-, and 4-unit properties). Loan modifications under the
program may be made until December 31, 2012.
3. More
Support for the GSEs. President Obama also announced more
support for the GSEs, including doubling of potential Treasury investment from
$100 billion to $200 billion for each GSE, to maintain their positive net
worth. The plan also raises the cap on mortgages that the GSEs may hold in
their portfolios by $50 billion to $900 billion.
Copyright National
Association of REALTORS®, Reprinted with permission.
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