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Obama Administration Announces Plan to Help Homeowners (Tax News On The Tenth)
By Tim Hughes 2009-03-25
Our office recently has been inundated with calls from clients wanting information regarding the government’s efforts to help homeowners avoid foreclosure. I am sure your clients look to you as well as a source for understanding the changes taking place with respect to home ownership. Accordingly we have summarized below some of the recent news regarding the government’s new initiative.
On March 4, President Obama’s administration announced details of a comprehensive plan to help responsible homeowners avoid foreclosure by encouraging affordable and sustainable mortgage loans. Under the Making Home Affordable plan, borrowers may seek either a loan modification or refinancing.
To be eligible for a loan modification, the homeowner’s mortgage payment (includes taxes, insurance and homeowner’s association dues) must be more than 31% of gross monthly income. In addition, the homeowner must have experienced a significant change in income or expenses to the point where the current mortgage payment is no longer affordable; must live in the home and received the loan before Jan. 1, 2009; and have an unpaid balance of less than $729,750.
Any modification will be temporary for three months. After three months, the loan modification can become permanent if the homeowner has made all payments on time and in full. Counseling will be required if the homeowner’s total debt to income ratio is 55% of more of gross monthly income.
The loan modification program is now available and borrowers should call their servicer to determine if they are eligible. Borrowers do not have to be delinquent to qualify for this program.
Borrowers who are current on their mortgage, but have been unable to refinance because their house has decreased in value, may now have the opportunity to refinance into a 30-year, fixed rate loan. This program is for homeowners with mortgage loans owned by Fannie Mae or Freddie Mac looking to improve their situation, such as moving from an adjustable rate to a fixed rate loan. Homeowners must be current on their current mortgage loan, meaning they have not been delinquent for the past 12 months.
To find out if your loan is owned by Fannie Mae or Freddie Mac, consumers can call toll-free telephone numbers at either organization or go to their web sites. Consumers can call these numbers between 8 a.m. and 8 p.m. Fannie Mae’s number is 800-7FANNIE and Freddie Mac’s is 800-FREDDIE. Homeowners can also verify Fannie Mae loans by emailing their name and address to resource_center@fanniemae.com or go to Freddie Mac’s web site at
http://www.freddiemac.com/avoidforeclosure
The U.S. Departments of Treasury, Housing and Urban Development and other federal agencies worked with lenders and nonprofit housing counselors to launch this program March 4, 2009. A detailed explanation of the plan is available at www.financialstability.gov. This site includes questions and answers that will help homeowners determine if they are eligible for a loan modification or refinancing assistance. It is our understanding that this site will be updated frequently as additional details are determined.
Borrowers who are delinquent and have not yet been in contact with their lender should call their servicer or a HUD-approved housing counselor immediately. The financialstability.gov Web site lists phone numbers for most lenders. Some organizations offering to provide help are not approved by HUD and often charge for their services. Beware of any organization that attempts to charge a fee for housing counseling or modification of a delinquent loan, especially if they ask for money in advance.
Please keep in mind that this is only a summary of the recent change in the law. If you would like more details about this, please do not hesitate to call our office. Our office has been successful in helping taxpayers in front of the IRS for over sixteen years. If you have clients with IRS collection problems please call our office and ask for Jessie at (847) 705-7555 to talk to one of our tax attorneys and find out how we can help your client in front of IRS collections.
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