President Obama has released the Homeowner affordability and stability plan.  Here is a quick guide on who it helps and how.


If you have a loan that is owned by Fannie Mae or Freddie Mac and your mortgage is for more than 80% and less than 105% of the current home value, you will be allowed to refinance as if it was a conforming loan (i.e., 20% down).  This will be very helpful if mortgage rates are significantly below your existing mortgage’s rate.

Loan Modification

You may qualify for a mortgage modification if all below are true

  • You occupy your house as your primary residence
  • Your monthly mortgage payment is greater than 31% and less than 43% of your monthly gross income
  • Your loan does not exceed current Fannie Mae and Freddie Mac loan limits ($417K in most areas).

Final eligibility will be determined by your mortgage lender based on your financial situation.  To me this means it is likely that if the bank thinks you can pay without the modification, they probably will not offer it.

If you qualify the mortgage payment will be reduced to 31% of your monthly gross income for five years and for each year you stay current on your payments (for the first five years), the government will pay an additional $1,000 of principal on the loan.

Complete eligibility details on both programs will be announced on March 4th when the programs starts.