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The Treasury Department rolled out new details of President Obama’s homeowner affordability and stability plan.  Here are some of the eligibility restrictions covered:

• Loans must be from on or before January 1, 2009, and can be modified ONE TIME through December 31, 2012

• First-lien loans on owner-occupied properties with unpaid principal balance up to $729,750 for a conforming loan

• All borrowers must fully document income, two most recent pay stubs, most recent tax return, and sign an affidavit of financial hardship

Curious if you qualify?  The administration’s Making Home Affordable page is just for you.  In this section, the administration talks directly to consumers and offers advice to the 7-9 million homeowners who may be eligible for mortgage assistance.  The site offers great self-assessment tools to help you figure out if you can apply for mortgage modification.  In addition to the website, a new phone number has been announced for home owers needing urgent assistance - the Homeowner’s HOPE Hotline for urgent help at (888) 995-HOPE.

So, how will the plan work?

• Three step relief plan for qualifying home owners:
  • First, reduce the interest rate (rate floor of 2%)
  • If necessary, extend the term or amortization of the loan up to a maximum of 40 years
  • If necessary, forbearing principal (principal forgiveness or a Hope for Homeowners refinancing are acceptable alternatives)

• Participating loan servicers will be required to use a net present value (NPV) test on each loan that is at risk of imminent default or at least 60 days delinquent.

• Servicers will follow a specified sequence of steps in order to reduce the monthly payment to no more than 31% of gross monthly income; monthly payment includes principal, interest, taxes, insurance, flood insurance, HOA fees.

• Homeowners who make their payments on time are eligible for up to $1,000 of principal reduction payments each year for up to five years.

• To incent lenders to participate, provide one-time bonus incentive payments of $1,500 to lender/investors and $500 to servicers for modifications made while a borrower is still current on mortgage payments.

More details are available at www.financialstability.gov

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