So the Obama administration is doing everything in its power to try and save your home. Really? They launched the “Making Home Affordable” or “Home Affordable Modification “initiative today and if you have nothing better to do, you can read the 17 pages of Government speak at:

http://www.treas.gov/press/releases/reports/modification_program_guidelines.pdf

For those of you looking for some of the high-level highlights so you can move on with your day, here they are:

Eligibility Requirements

• Origination Date of Loan Subject to Modification:
  The mortgage to be modified must have been originated on or before January 1, 2009.
  (Hopefully you got a good rate if you bought in the last two months!)
• Program Expiration:
  New borrowers will be accepted until December 31, 2012. Program payments will be made for up to five years after the date of entry into a Home Affordable Modification. Monitoring will continue through the life of the program.
  (So Big Brother will be watching your loan too.)
• Qualification Terms:
  a.) The home must be an owner occupied, single family 1-4 unit property (including condominium, cooperative, and manufactured home affixed to a foundation and treated as real property under state law).
  b.) The home must be a primary residence (verified with tax return, credit report, and other documentation such as a utility bill).
  c.) The home may not be investor-owned.
  d.) The home may not be vacant or condemned.
  e.) Borrowers in bankruptcy are not automatically eliminated from consideration for a modification.
  f.) Borrowers in active litigation regarding the mortgage loan can qualify for a modification without waiving their legal rights.
  g.) First lien loans must have an unpaid principal balance (prior to capitalization of arrearages) equal to or less than:

                           1 Unit: $729,750  

                          2 Units: $934,200

                          3 Units: $1,129,250

                         4 Units: $1,403,400

(These guys obviously don’t live in the Bay Area)

• In Foreclosure Process:
  Any foreclosure action will be temporarily suspended during the trial period, or while borrowers are considered for alternative foreclosure prevention options. In the event that the Home Affordable Modification or alternative foreclosure prevention options fail, the foreclosure action may be resumed.

• Current Loan To Value (LTV):

             There is no minimum or maximum LTV ratio for eligibility purposes.

(Isn’t this one of the things that got us into this mess in the first place?)

• Loan Type Exclusions:
  Loans can only be modified under the Home Affordable Modification program once.
  (You mean the bailouts will not go on forever?)
• Property Value:
  The servicer may use, at its discretion, either one of the government sponsored enterprises (GSEs) automated valuation model (AVM) – provided that the AVM renders a reliable confidence score – or a broker price opinion (BPO). In all cases, the property valuation may not be more than 60 days old.
  (Does my Zestimate count?)
• Income and Asset Validation:
  The borrower’s income will be verified by requiring a signed Form 4506-T (Request for Transcript of Tax Return) and obtaining the most recent tax return on file for each borrower on the note. For wage earners, the two most recent pay stubs for each wage earner on the note will also be required. For self-employed borrowers or for non-wage income, the borrower’s income will be verified by obtaining other third party documents that provide reasonably reliable evidence of income. Borrowers must also represent and warrant that they do not have sufficient liquid assets to make their monthly mortgage payments.
• Adjustment of the rate after 5 years:
• The modified interest rate must remain in place for five years, after which time the interest rate will be gradually increased 1% (100 basis points) per year or such lesser amount as may be needed until it reaches the Interest Rate Cap.

• “Pay for Success” Incentives to Servicers:
  Servicers will receive an up-front fee of $1,000 for each eligible modification meeting guidelines established under this initiative. Servicers will also receive “pay for success” fees -as long as the borrower is successful at staying in the program – of $1,000 each year for three years, subject to a de minimis threshold.
• Responsible Modification Incentives:
  Because loan modifications are more likely to succeed if they are made before a borrower misses a payment, the plan will include an incentive payment of $1,500 to mortgage holders and $500 for servicers for modifications made while a borrower at risk of imminent default is still current on their payments.

There are a ton of other tidbits in the document that will make your brain melt, but these are some of the most pertinent. I truly encourage you to read the complete document if you think you might qualify.

http://www.treas.gov/press/releases/reports/modification_program_guidelines.pdf

The expectation is that up to 9 million borrowers, including up to 5 million who have mortgages held by government controlled mortgage finance giants Fannie Mae and Freddie Mac, should qualify. Just note that borrowers with Fannie and Freddie loans should be eligible to refinance through June 2010 while all other borrowers can qualify through 2012.