Who Qualifies for Mortgage Assistance?

President Obama yesterday again showed that he is addressing the tough questions but that there are no easy ways out of the hole we are in. People are now asking how to qualify for help under the new Homeowner Affordability and Stability Plan. Here are the answers, as far as we know now:

1. The borrower must have a mortgage currently owned by Fannie Mae or Freddie Mac. (Most recent estimates are that about 19% of Arizona mortgages fit.)
2. The property must be an owner-occupied primary residence.
3. A current appraisal will be required and the new proposed mortgage must not exceed 105% of the current appraised value – including any fees associated with the transaction.
4. The borrower must have a debt-to-income ratio 38% or less - - with possible government assistance to subsidize a rate buy-down to target a 31% maximum debt-to-income ratio.
5. Borrowers that are current, but based on qualifications would not meet the above requirements, may be considered if they are deemed to be in “imminent danger” of defaulting. No definition yet of “imminent danger” -- details are to be released on March 4th.

This new plan will assist more homeowners than its predecessors ( FHA Secure and Hope For Homeowners); however, is limited in scope and effectiveness for many Arizona homeowners.