The “Making Homes Affordable” Program introduced by the Obama administration is not limited to Fannie and Freddie Mac loans, also known as conventional or conforming loans . There are actually two sets of loan programs under the Making Homes Affordable (MHA) program. One program is called Home Affordable Refinance, and is for conforming loans on which payments are not late and the loans are not more than 105% of the value of the home. This refinancing program, which we’ve covered extensively on this blog extensively, leaves many struggling homeowners in the cold.

For instance, I’ve talked to many people who’ve just told me they don’t qualify because they are underwater on their house by $100,000 or their loan was a subprime loan. Others may be behind on their payments or have a “jumbo loan”, meaning the loan amount was above the conforming loan limit of $417,000 ($625,500 in a high cost real estate area like San Francisco). They look at the MHA refinancing program requirements as described by the media and think MHA cannot help them out. Not true.

The Home Affordable Modifications part of MHA is completely different. To qualifications for loan restructuring help, a mortgage must meet the following requirements:

• Home is primary residence
• Mortgage equal to or less than $729,750
• You are having trouble paying your mortgage. For example, you’ve had a significant increase in your mortgage payment OR reduction in your income since you got your current loan OR have you suffered a hardship that has increased your expenses (like medical bills).
• Current mortgage was obtained before January 1, 2009
• Your payment on your first mortgage (including principal, interest, taxes, insurance and homeowner’s association dues, if applicable) is more than 31% of your current gross income. There are online calculators on the http://makinghomesaffordable.gov website if you are not sure if you meet this requirement.

What if your home has gone back to the bank? Can you still qualify? The answer is yes, surprisingly. I have a friend who actually moved out of her house a few months ago because she couldn’t afford the payments. She thought her house was lost to her forever. To her amazement, her mortgage company contacted her and asked if she would like to do a mortgage restructure under the MHA program. While lenders are not required to lower the principal on the mortgage, the bank agreed to do a 25% principal reduction on her loan as part of the mortgage restructuring. She happily qualified and now is back in her home.

Anyone else have successful restructuring stories to share? Tell us!

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