If the answers to these questions are “yes,” then the borrower may qualify.
- Does Freddie Mac or Fannie Mae own or back his or her mortgage? Check here.
- Was his or her mortgage originated on or before May 31, 2009?
- Is he or she underwater, or have a current loan-to-value ratio greater than 80 percent?
- Is he or she current on their mortgage payments?
- Is his or her recent mortgage payment history good? That is, the borrower doesn’t have any 30-day or more late payments in the past six months and no more than one late payment in the past 12 months?
- Is his or her home their primary residence, second home or investment property?
program also proves to be exceptionally complex, which has made it extremely hard for homeowners to qualify for this refinancing option. In a struggling city like Detroit, its homeowners, who are looking to get above water on their mortgage payments, want more from the program.
Activists and homeowners told Watt at the Detroit event last week that HARP (Home Affordable Refinance Program)
still has several issues. The program requires homeowners to be current on their mortgage payments for the last 12 months and doesn't reduce principal owed by borrowers, making it less attractive for those whose homes have plummeted in value.
According to Steve Babson, a spokesman for Save Detroit -- Save Our Homes, 40% of Detroit homeowners owe more on mortgages than the properties are worth and nearly 10% are behind on payments, reported Bloomberg
Babson said that Detroit needs a program that will address its thousands of residents who are dealing with unemployment and medical costs. “We don’t need just lower interest on an inflated mortgage balance. We need principal reduction,” he told Bloomberg.
FHFA is set to enable principal reductions for borrowers through a program called the Neighborhood Stabilization Initiative
. Starting this fall, Fannie Mae and Freddie Mac will begin selling loans to nonprofit groups that can reduce the principal balance if they believe it helps keep borrowers in their homes.