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Homeowners Assistance FAQs
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Read important questions and answers to consider when looking for help with your mortgage.
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| What is "Making Home Affordable" all about? |
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| "Making Home Affordable" is part of the Treasury Department's comprehensive strategy to get the housing market back on track. Through this program, up to 9 million American families may be eligible to refinance or modify their loans to a payment that is affordable now and into the future. |
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| How long will the Home Affordable Refinance be available? |
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| The program expires on June 30, 2011. Your refinance transaction must be closed, and funded on or before that date. |
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| Who is my "loan servicer"? Is that the same as my lender or investor? |
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Your loan servicer is the financial institution that collects your monthly mortgage payments, and has responsibility for the management and accounting of your loan. Your servicer may also be your lender, which means they own your loan. However, Sovereign services many loans on behalf of other investors.
Traditionally, banks used money deposited in customers' savings accounts to make loans. They held the loans, earning the interest as borrowers repaid over time. Banks were thus limited in the number of loans they could make, because they had to wait to make new ones until savings deposits grew or existing borrowers repaid their loans. Many families who wanted to own a home were unable to do so because there was not a steady supply of money to lend.
Over time, banks started to sell mortgages loans in the secondary mortgage market or turn loans into cash by pooling large groups of loans together to create mortgage–backed securities that could be sold to investors such as pension funds and hedge funds. The investors get the right to collect future payments, and the bank gets cash that it can use to make more loans. Investors hire loan servicers to collect payments and interact with customers.
If you have questions about whether your loan servicer owns your loan or is servicing it on behalf of a third party, you should call your loan servicer at the number on your payment coupon or monthly mortgage statement. |
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| I'm current on my mortgage. Will a "Home Affordable Refinance" help me? |
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| Eligible borrowers who are current on their mortgages, but have been unable to take advantage of today's lower interest rates because their homes have decreased in value, may now have the opportunity to refinance. Through the "Home Affordable Refinance Program," Fannie Mae and Freddie Mac will allow the refinancing of mortgage loans that they own or that they placed in mortgage-backed securities. |
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| How do I know if I am eligible? |
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You may be eligible if:
- You are the owner occupant of a one- to four-unit home
- The loan on your property is owned or securitized by Fannie Mae or Freddie Mac (Don't know? See below)
- At the time you apply, you are current on your mortgage payments (current means that you haven't been more than 30-days late on your mortgage payment in the last 12 months or, if you have had the loan for less than 12 months, you have never missed a payment)
- You believe that the amount you owe on your first mortgage is about the same or slightly less than the current value of your house
- You have income sufficient to support the new mortgage payments, and
the refinance improves the long-term affordability or stability of your loan
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| How do I know if the refinance will improve the long-term affordability or stability of my loan? |
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| We can give you a "Good Faith Estimate" that includes your new interest rate, mortgage payment, and the amount you will pay over the life of the loan. Compare this to your current loan terms. If it is not an improvement, refinancing may not be right for you. Consider also that refinancing from an adjustable rate to a fixed rate loan or eliminating higher risk loan terms such as interest only payments or balloon payments may also provide long-term stability. |
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| How do I know if my loan is owned or has been securitized by Fannie Mae or Freddie Mac? |
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| Both Fannie Mae and Freddie Mac have established toll-free telephone numbers and Web submission processes to make this data available. Borrowers will provide or enter information to determine if either agency owns or securitized the loan. This information is not a guarantee of eligibility for the refinance program, as other qualifying criteria must also be met.
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| I owe more than my property is worth. Do I still qualify to refinance under the "Making Home Affordable Program"? |
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| Eligible loans will include those where the first mortgage will not exceed 105% of the current market value of the property. For example, if your property is worth $200,000, but you owe $210,000 or less on your first mortgage, you may qualify. The current value of your property will be determined after you apply to refinance. |
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| I have both a first and a second mortgage. Do I still qualify to refinance under "Making Home Affordable"? |
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| As long as the amount due on the first mortgage is less than 105% of the value of the property, borrowers with more than one mortgage may be eligible for a "Home Affordable Refinance." Your eligibility will depend, in part, on agreement by the lender that has your second mortgage to remain in a second position, and on your ability to meet the new payment terms on the first mortgage. |
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| Will refinancing lower my payments? |
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The objective of the "Home Affordable Refinance" is to provide creditworthy borrowers who have shown a commitment to paying their mortgage the opportunity to get into a mortgage with payments that are affordable today and sustainable for the life of the loan. Borrowers whose mortgage interest rates are much higher than the current market rate should see an immediate reduction in their payments.
Borrowers who are paying interest only, or who have a low introductory rate that will increase in the future, may not see their current payment go down if they refinance to a fixed rate and payment. These borrowers, however, could save a great deal over the life of the loan by avoiding future mortgage payment increases. When you submit a loan application, your lender will give you a "Good Faith Estimate" that includes your new interest rate, mortgage payment, and the amount that you will pay over the life of the loan. Compare this to your current loan terms. If it is not an improvement, a refinancing may not be right for you. |
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| What documentation will I need? |
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It will help your lender if you gather some information and documents before you call. You will need:
- Information about the monthly gross (before tax) income of all the borrowers on your loan, including recent pay stubs if you receive them or documentation of income you receive from other sources
- Your most recent income tax return
- Information about any second mortgage on the house
- Account balances and minimum monthly payments due on all of your credit cards
- Account balances and monthly payments on all your other debts such as student loans and car loans
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| I am delinquent on my mortgage. Will I qualify for a "Home Affordable Refinance"? |
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| No. Borrowers who are currently delinquent or have been 30 days overdue more than once during the past 12 months will not qualify. You should contact your servicer to see if a "Home Affordable Modification" is an option for you. |
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| Will I need mortgage insurance? |
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| If your existing loan has private mortgage insurance, your current insurance coverage will be transferred to the refinanced loan. If your existing loan does not have private mortgage insurance, it will not be required as part of the "Home Affordable Refinance." |
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| Do I need to be behind on my mortgage payments to be eligible for a "Home Affordable Modification" or a Sovereign Home Loan Modification? |
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| No. Responsible borrowers who are struggling to remain current on their mortgage payments are eligible if they are at risk of imminent default, because their mortgage payment has recently increased to a level that is not affordable. If you have had or anticipate a significant increase in your mortgage payment or you have had a significant reduction in income or have experienced some other hardship that makes you unable to pay your mortgage, contact your servicer. You will be required to document your income and expenses, and provide evidence of the hardship or change in your circumstances. |
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| How do I apply for a modification under the Making Home Affordable Plan or a Sovereign Home Loan Modification? |
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You should contact the Sovereign Bank Loss Mitigation Team at 1-888-656-8101 or via e-mail at lossmiti@sovereignbank.com, and ask to be considered for Modification.
If you would like to speak to a housing counselor, you can call 1-888-995-HOPE (4673). HUD-approved housing counselors can help you evaluate your income and expenses, and understand your options. This counseling service is free. |
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| What information and documents will I need? |
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It will speed the processing of your application if you gather some information and documents before you call. For all borrowers on your loan, you will need:
- Information about monthly gross income, including recent pay stubs if the borrowers are salaried and receive them, and documentation of any income received from other sources.
- Most recent income tax return
- Information about assets
- Information about any second mortgage on the house
- Account balances and minimum monthly payments due on all credit cards
- Account balances and monthly payments on all other debts such as student loans and car loans
- A hardship letter describing why your mortgage is unaffordable (i.e. what caused your income(s) to be reduced and expenses to be increased)
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| I do not live in the home that secures the mortgage I'd like to modify. Is this mortgage eligible for a "Home Affordable Modification" or a Sovereign Home Loan Modification? |
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If your loan is owned by Fannie Mae or Freddie Mac, it is only eligible for a Home Affordable Modification if the property is your primary residence. Even though loans
on non-owner occupied properties are not eligible for modifications under the "Home Affordable Modification" Program there are still other loss mitigation options that may be available to you. Misrepresenting your occupancy in order to qualify for this program is a violation of Federal law and may have serious consequences.
If your loan is owned by Sovereign Bank, you may still be eligible for a Sovereign Home Loan Modification even if you use the property as a vacation home or rent it out to tenants.
Contact the Sovereign Bank Loss Mitigation Team at 1-888-656-8101 or via e-mail at lossmiti@sovereignbank.com for more details.
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| Will the modified loan include property taxes and homeowners insurance? |
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| Yes. The modification payment will include a monthly amount to be set aside (escrowed) to pay taxes and insurance when they become due. This escrow is required even if your prior loan did not include escrow. |
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| How much will a modification cost me? |
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Borrowers who qualify for a "Home Affordable Modification" or a Sovereign Home Loan Modification will not be required to pay a modification fee or pay past due late fees prior to the date of modification. If there are costs associated with the modification, such as payment of back taxes, your servicer may give you the option of adding them to the amount you owe on your mortgage or paying some or all of the expenses in advance. Paying these expenses in advance will reduce your new monthly payment and save interest costs over the life of your loan.
If you would like assistance from a HUD-approved housing counselor or are referred to a counselor as a condition of the modification, you will not be charged a counseling fee. Borrowers should beware of any organization that attempts to charge an up-front fee for housing counseling or modification of a delinquent loan, or any organization that claims to guarantee success.
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| Is housing counseling required under this program? |
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| Borrowers, especially delinquent borrowers, are strongly encouraged to contact a HUD-approved housing counselor to help them understand all of their financial options, and to create a workable budget plan. These services are free. However, housing counseling is only required for borrowers whose total monthly debt are very high in relation to their income. It is voluntary for other applicants. |
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We know no one likes to wait, but we ask for your patience as we work to help as many customers as possible through the program. |
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Equal Housing Lender - Member FDIC
