Obama Home Affordable Mortgage Program: New Rules and Directives

Fannie Mae, a publicly traded, government owned mortgage securities firm is discreetly pushing lenders to foreclose on homeowners that have been in delinquency for 12 months or longer – even if they are applying for loan modification of postponement. This goes against federal foreclosure prevention programs like the Home Affordable Modification Program or Obama home affordable mortgage program, which encourages banks through financial incentives and directives to help troubled homeowners keep their homes when faced with foreclosure. Fannie Mae, along with Freddie Mac, is the largest mortgage securities firm in the country. Publicly traded and virtually owned by the US government, Fannie Mae was designed so banks and lenders could comfortably issue more credit to homeowners by federally securing bank mortgages.

A recent rash of newly released, confidential documents between Fannie Mae and banks, like PNC and Bank of America, instruct banks to deny requests for postponement of foreclosure if borrowers were more than 12 months delinquent. Even if the homeowner is applying for a loan modification through the HAMP program, Fannie Mae has asked banks to foreclose. This is in direct contradiction of the HAMP program, and it is unclear if it violates the law. What is more, these documents reveal that Fannie projects 10-12% of their foreclosure supply ‘to go to sale.’

Fannie turning up the heat on banks to move on year-old delinquencies- This move by Fannie is designed to pressure banks dragging their feet to foreclose on homeowners. After the housing bubble burst in 2007, many homeowners were left with an upside-down mortgage, and susceptible to foreclosure and short sales by the specter of high unemployment. Programs to assist millions of troubled homeowners were formed by the federal government. These programs were meant to steady the housing market and the flow of mass foreclosures, which would have added more toxic assets to the ledgers of banks and mortgage securities firms like Fannie Mae. It remains unclear, now, what policy is informing the decision of Fannie to act in spite of federal efforts to assist homeowners. Regardless, many troubled homeowners may be out of luck if they have been delinquent 12 months or more.

You have the justification potential in paying for the new mortgage that you are applying. The refinance develops a good stability of your loan that it will be affordable for you.

In refinance, your loan would be refinanced on a lower rate and tenure will extend so that you can afford the loan and get more time to repay. There would be no foreclosure charges attached with the process and no processing fee would be charged. So, we can easily judge that $75 billion grants offered in Obama’s affordable home modification will surely help in modification of the loan.

Learn more about Obama Making Home Affordable Mortgage Program.