The March 4th release of guidelines for the Home Affordability and Stability Plan, which was announced on February 18th, has prompted many questions from homeowners who have found themselves "upside down" in their homes. 

Since we specialize in short sales, many of our clients are wondering if they should pursue refinancing or loan modification before deciding to short sell their property. 

We created this page to help answer some of the more frequently asked questions and to help guide visitors to the resources available to help them explore their options. 

The Home Affordability and Stability Plan is a two-part plan targeting homeowners who owe more on their home loan(s) than their property is currently worth.  TO BE ELIGIBLE, THE PROPERTY MUST BE THE HOMEOWNER'S PRIMARY RESIDENCE.  Eligible homeowners fall into two categories:

1. Homeowners who have NOT been more than 30 days late on a payment in the past 12 months may be eligible to refinance their primary loan IF the loan is a Fannie Mae or Freddie Mac loan.  The homeowner must be able to demonstrate a stable income sufficient to support the new loan payments.

·         Homeowners with only one loan may be eligible to refinance if the loan amount does not exceed 105% of the current market value of the property.  REFINANCING WILL NOT REDUCE THE PRINCIPAL BALANCE OF YOUR LOAN.  To find out if your loan amount meets this requirement, use  the following formula:

Loan Balance ÷ 1.05 = X

If the current market value of the home is equal to or GREATER than the value of "X" in the formula above, the loan may be eligible for refinance. 

If the current market value of the home is LESS than the value of "X", then the home will NOT be eligible for refinance.

If you are unsure about the current market value of your home, please click here to request a FREE comparative market analysis.

·         Homeowners with more than one loan may also be eligible to refinance if the amount of the primary loan does not exceed 105% of the current market value of the property.  (See formula above.)  Eligibility will be dependent on the approval of the second lien-holder and the terms of the loan in second position will NOT be modified.    

2.    Homeowners who are behind on their loan payments OR who are at risk of "imminent default"  may be eligible for loan modification if they owe less than $729,750. 

·         “Imminent default” could include a significant increase in loan payments, a reduction in income or other financial hardship.

 

·         Homeowners with more than one loan will ONLY be eligible for modification of the primary loan.

 

·         If you are eligible for loan modification, your interest rate could be reduced to as low as 2% for five years.  If your payments still exceed 31% of your gross monthly income after your interest rate is reduced to 2% and the loan is extended to 40 years, then your lender may forgive a portion of your debt.  Debt forgiveness is optional and is not required by your lender.

 

·         Borrowers may also be eligible for financial incentives of up to $1,000 per year for five years ($5,000 total) toward principal reduction.     

 

If you own an investment property or second home that is worth less than the outstanding loan balance(s) OR if you a re NOT eligible for the Home Affordability and Stability Plan programs, a short sale may be the best option for you.

If you would like to schedule a FREE, no-obligation consultation with an Arizona Short Sale Specialist, please provide the following information:

 

There is never a fee to get assistance or information about Making Home Affordable from your lender or a HUD-approved housing counselor.

Beware of any person or organization that asks you to pay a fee in exchange for housing counseling services or modification of a delinquent loan. Do not pay – walk away!

Beware of anyone who says they can “save” your home if you sign or transfer over the deed to your house. Do not sign over the deed to your property to any organization or individual unless you are working directly with your mortgage company to forgive your debt.

Never make your mortgage payments to anyone other than your mortgage company without their approval.