Bad news first-

• This program does not help with second mortgages or HELOCs. However, the information you gather for your application package MIGHT help you or your Realtor negotiate with the second lender.
• You cannot go straight to a short sale without going through the process of applying for refinance or modification.

PLEASE NOTE- There are a lot of home loan modification programs available through individual lenders, this is only in reference to the Making Home Affordable program. Here are the steps you have to take to determine eligibility.

1. First you have to determine if you are eligible for a REFINANCING through this program. Here’s how:

•      You must be the owner of a home that has a loan insured by Fannie Mae or Freddie Mac. You can check online for Fannie Mae or Freddie Mac to see if your home qualifies. 
•  The first mortgage must be for an amount no more than 125% of what you owe. In other words, if your home is now worth $200,000 and you owe $250,000, you could qualify, but if you owe $275,000 you would not. If you aren’t sure of your homes current market value, please contact me 
• You must be current on your mortgage payments.

If you do not meet those requirements you may qualify for a LOAN MODIFICATION, which can lower your monthly payments to an affordable level. To qualify for a modification you must meet the following:

• The home must be your primary residence
• The loan must be for less than $729,750
• You must have gotten the loan before January 1, 2009
• Your payment; including principle, interest, taxes, insurance and HOA dues must be more than 31% of your gross income. If you need help determining this, CLICK HERE 
• You must have either had a) a significant change to your payment amount or b) a change in circumstances that makes your payment a hardship.  This can be a loss of income, a health crisis etc.

If you meet all those requirements, you MAY qualify for a loan modification through the Making Home Affordable program. If you do NOT qualify for a refinanace or a loan modification, or are unable to make the payments that are arranged through the MHA program, you may then qualify for the expedited review process on a short sale. Those  guidelines state:

• You must have applied for the refinance or loan modification (above) and been turned down OR
• Been approved but be unable to complete the trial period for your new payments OR
• Be late for two consecutive months AFTER completing the trial phase successfully OR
• You may simply request a short sale after your application has been approved

At this point you will be participating in the Home Affordability Foreclosure Alternatives program, or HAFA. Here’s how that will help you:

• You will already be qualified, eliminating the need for the often lengthy approval process
• You will be able to have a pre approved price for your short sales prior to listing the home
• Lenders have to release you from future liability (see note above regarding second mortgages)
• Lenders will not be allowed to reduce the commissions to the real estate agents. They often do this at the last moment now, something that has made many agents shy away from representing short sale sellers. (At Alise Roberts and Co, we have always provided the same excellent service to our sellers involved in a short sale as we do to any other client)  
• An incentive is provided to lenders to encourage them to participate in this program, increasing the chances of more lenders participating.

Overall, I think the MHA and HAFA programs will help a lot of sellers, if they make use of it. Education yourself on alternatives is so important. Often, homeowners facing foreclosure do nothing but wait for what they think is the inevitable. I can tell you from helping dozens of families this year- know your options.

My previous call to a lender who shall for now remain nameless had started at 3:32, the day before. Someone, somewhere decided that the thing callers would want most is constant reassurance that the call was very important to them. A kindly woman assured me every 30 seconds that this was the case. As she would finish speaking, the line would click (which for the first 3 or 4 times made me think I was actually getting transferred) and a firm sounding gentleman would suggest I just leave a message by pressing “1″ and get a returned phone call within 5 business days. I decided to believe the woman, because I thought my call SHOULD be very important to them.

After 48 minutes, I finally heard a ring. At last, human contact ahead! I sat up straight and prepared to use friendly words, pushing the impatient thoughts to the land of far, far away. Accross the table my husband looked relieved as I finally turned off the monotonous speakerphone and held the phone to my ear. My heart sank as I realized it was yet another recording.

“Our offices are now closed. Our hours are Monday -Friday 8:30 am to 5:30 pm East coast time. Please call back during normal business hours.”

“NORMAL BUSINESS HOURS?”  I nearly shrieked into the phone. “Why don’t you add another velvet voiced recording to the dynamic duo and have him or her mention these NORMAL BUSINESS HOURS?”  My husband looked up from his computer, eyebrows raised, thinking this was how I had chosen to speak to the human I had thought was about to answer.   

They had been closed the whole time I had been on hold. Nothing frustrates me more than wasted time. All I had to show for most of an hour was a new high score on Bejeweled for Facebook.

So this time, I was ready. I even had work I could do WHILE sitting on hold. You can imagine my surprise when a live person answered without even sending me to a brief recording. I stammered for a moment.

“Is this Bank of America short sale department?” Oops. I wasnt going to say any names.

“Yes.” a gentleman assured me, sounding as if he might be about to hang up.

“You answered fast.” I hoped that came across as a  compliment.

“We’ve hired some new people, what can I do for you?” In less than 10 minutes he had not only answered my questions, but directed me to a couple other numbers to avoid the long hold times in the future.

My faith in humanity restored, I dialed the next bank.

The planned changes are supposed to increase transparency and accountability from mortgage companies.  One of these priorities is to put more pressure on lenders by highlighting the ones who are lagging in loan modifications. Another is to delay the cash incentive payments to banks until the loan modifications have actually become permanent.  I think there is a HUGE value to that. As an active professional, I can attest to the fact these modifications are taking an incredibly long time. Homeowners are stuck in a limbo of not knowing if they are facing foreclosure or relief for months at a time. I have had many sellers that were considering a short sale , but prefer to modify their loan if that’s an option. When it takes months for the modification application process, when a homeowner is turned down, they now have thousands of dollars in additional fines that have to be negotiated away.

The original target for the foreclosure crisis had been borrowers who had gotten involved in subprime mortgages. Now this crisis has now extended to those who took out conventional, fixed-rate loans as well.  Due to high unemployment and falling home values, it has even extended to some borrowers who were able to put down a significant down payment on their homes of at least 10 to 20 percent.