Massachusetts Real Estate


Making Home Affordable Loan Modification Program

Making home affordable program to avoid foreclosureThe Obama Administration has announced new U.S. Department of the Treasury guidelines to enable servicers to begin modifications of eligible mortgages under the Administration's Homeowner Affordability and Stability Plan.

The release of detailed requirements for the "Making Home Affordable" program facilitates implementation of the critical provisions that will help bring relief to responsible homeowners struggling to make their mortgage payments, while preventing neighborhoods and communities from suffering the negative effects of foreclosure such as lower property values, increased crime and higher taxes.

You can see the complete Home Affordable Loan Modification Program Guidlines here.

Here are the highlights of the loan modification program:

• Mortgages for single-family properties that are worth more than $729,750 are excluded from the provisions of this bill. For two families the amount is $934,200. For three families the amount is $1,129,250 and for four families the amount is $1,403,400.

• Interest rates can be lowered to a minimum of 2 percent and then if necessary, the term of the loan can be extended to a maximum of 40 years.

• The home must be a primary residence and verified as such with a tax return, credit report, and other documentation such as a utility bill. The home may not be investor-owned property.

• The home may not be vacant or condemned.

• Borrowers must provide their most recent tax return and two pay stubs, as well as an "affidavit of financial hardship" to be qualified.

• Borrowers in bankruptcy are not automatically eliminated from consideration for a modification in this program.

• Borrowers in active litigation regarding the mortgage loan can qualify for a modification without waiving their legal rights.

• Borrowers are only allowed to have their loans modified once, and the program only applies for loans made on Jan. 1, 2009 or earlier.

• Eligibility is restricted to loans originated on or before January 1, 2009.

• Incentives are provided to extinguish second liens on loans modified under the program.

• Homeowners are eligible for up to $1,000 of principal reduction payments each year for up to five years.

• Separately, up to 5 million borrowers who have mortgages held by government controlled mortgage finance giants Fannie Mae and Freddie Mac should be eligible to refinance through June 2010.

Foreclosed homes in Metrowest MassachusettsThis loan modification home affordability program should stem the tide for quite a few folks who would otherwise end up in foreclosure.

I applaud the fact that the government has finally started to take some meaningful action. This new bill comes on the heels of the 1st time buyers incentive program.

While these are great steps to get the nations housing back on track, there are some that are so far in over their head that even a loan modification is not going to help.

There are still options available that can be taken to avoid foreclosure. A short sale is one of the means that may allow you to sell your home and get rid of your debt.

See these articles for further details:

Foreclosure avoiding it through a short sale

Short sales and deed in lieu of foreclosure

Massachusetts Short Sale


About the Author: The above Real Estate information on making home affordable loan modification program was provided by BillRE/MAX Executive Realty Hopkinton Massachusetts Gassett, a Nationally recognized leader in his field. Bill can be reached via email at or by phone at 508-435-5356. 

Have a home to sell in Metrowest Mass? I have a passion for Real Estate and love to share my marketing expertise! 

For Metrowest Massachusetts Real Estate and homes see Metrowest MA Real Estate. Want to have MLS access to beat other buyers to your dream home? Sign up with no obligation at my MLS Property Finder Site.

I service the following towns in Metrowest Massachusetts: Hopkinton, Milford, Upton, Southboro, Westboro, Ashland, Holliston, Mendon, Hopedale, Medway, Grafton, Northbridge, Uxbridge, Franklin, Douglas, and Framingham MA.

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Building lasting relationships by helping people move in and out of Metrowest Massachusetts for the last 23 years.

Bill Gassett is a thirty-two year veteran to the real estate industry. He enjoys providing helpful information to buyers, sellers and fellow real estate agents to make sound decisions. His work has been featured on RIS Media, National Association of Realtors, Inman News, Placester, RESAAS, Credit Sesame and others.

Comment balloon 82 commentsBill Gassett • March 16 2009 08:20AM


Thanks for this information Bill - This is the kind of info that gets bookmarked and then revisited as needed.So much to remember these days.Thanks for all the work

Posted by Greg Miller, Florida Home Loans - Conventional,FHA,USDA,VA (Ruoff Home Mortgage ) over 10 years ago

Bill--This is good information in an easy to understand format. Hopefully the program will work to help those who want to stay in their homes.

Posted by Teri Eckholm, REALTOR Serving Mpls/St Paul North & East Metro (Boardman Realty) over 10 years ago


This is some good information, thank you for breaking it down for us.

Posted by Don Rogers, Realtor, Broker, CDPE, GRI, OnullFallon MO & St Charles County MO homes (Keller Williams Realty Chesterfield) over 10 years ago

Fantastic information to share, Bill, about the loan modification program. Thank you for pointing out some of the most important aspects.

Posted by Pat Starnes-Front Gate Realty, 601-991-2900 Office; 601-278-4513 Cell (Front Gate Real Estate) over 10 years ago

Sharon, Terry, Don, Pat - Your welcome. Lets hope this program really stems the tide for many of the home owners that have been making their payments but are really struggling. We need to drastically slow the onslaught of foreclosures.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 10 years ago

WOW!  This is about the most cogent and comprehensive outline I've seen.  Hopefully, it will get some Google juice and consumers will read it. 



Posted by Lenn Harley, Real Estate Broker - Virginia & Maryland (Lenn Harley,, MD & VA Homes and Real Estate) over 10 years ago


Nice breakdown...I'm not sold on it yet until I start seeing a positive effect...I do see some deals closing...but that might not be the reason why we just put 5 deals in the hopper. Most of them are cash deals.

Posted by Neal Bloom, Realtor CRS-Weston FL Real Estate (Brokered by eXp Realty LLC) over 10 years ago

Bill thanks for sorting things out.  Much appreciated and bookmarked.

Posted by Brien Berard, Maryland Real Estate Agents - Laurel Real Estate (Remax Professionals Laurel MD) over 10 years ago

As you said, it is good to see the government taking action to meet a very real need.  And it is information we all need.   Thanks for taking the time to condense it!


Posted by Bruce & Mary Smith, REALTORS, Savannah Lakes Village McCormick SC (Savannah Lakes Homes) over 10 years ago

Bill, this is a very helpful article!  I agree that it's nice to see government efforts aimed at homeowners as opposed to corporations. 

Posted by Pam Pugmire, Meridian Idaho Real Estate (Silvercreek Realty Group) over 10 years ago

Bill ! - Excellent ! ... if the right people can restructure this properly for those who need it, this could be a very helpful option. Nicely laid out.

Posted by Sheldon Neal, That British Agent Bergen County NJ (Bergen County, NJ - RE/MAX Real Estate Limited) over 10 years ago

Bill, Excellent run down on the high points, lets hope these programs can stem the tide of foreclosure for many and more importantly stop affecting neighbors who are loosing equity for no reason but proximity.


Posted by Steve Loynd, 800-926-5653, White Mountains NH ( Alpine Lakes Real Estate Inc., ) over 10 years ago

Thanks Lenn. I saw the information on the website. I hope as many people who need help see it as well.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 10 years ago

Bill.... as much as I applaud the gov't for putting this out there, I think this is another smoke screen. Not sure if you remember the FHA secure loan or the H4H program?  The gov't and even HUD stepped up and wrote these new programs. The FHA Secure might have helped about 200,000 families, which is better than nothing. In regards to the H4H program, I haven't heard who it has helped. But what is lacking in the past programs and what I see in this program is the lender participation's. The gov't can't make lenders lend. And with this program, you are asking lenders to go way out of their comfort zone. Example, allowing those in bankruptcy to have a shot at this. That means that the lenders would have to change their guidelines with these loans, yet penalize others trying to get a loan. Maybe a law suit? 

In any case, Obama is a smart cookie in a way. If lenders don't do these loans, at least he will say that he tried. In many of the examples of what is allowed, lenders are losing money upfront and down the road. In my guesstimating and assumption, I would bet many lenders will just roll the dice. Not unless the gov't sets up a fund for these investors/lenders to make money. Banks are in the business of making money, even though they made poor decisions in the past. Bernanke is spending billions of dollars a week to keep rates low. We won't be able to do that and fund this program at the same time, in my opinion.

Overall, my comment might sound negative, but it's reality. Just as Fannie Mae & the gov't put out the Du - refi plus program. After reviewing those details, I don't see one investor doing the program unless they are guaranteed some sort of monies for taking the risk that the gov't outlined in the exceptions of the program. Especially when investors are raising credit scores even on FHA streamline refinances.  Why would they do these loans then?  Just curious and it's something that needs to be talked about. The end result, who is going to buy these loans unless some pool is established, that the gov't will back...  just my .02.

jeff belonger

Posted by Jeff Belonger, The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans ( Social Media - Infinity Home Mortgage Company, Inc) over 10 years ago

Bill..great post on the loan modification program.  I'm going to bookmark for a GREAT reference. Thanks so much,

Posted by Rebecca Gaujot, Realtor®, Lewisburg WV, the go to agent for all real estate (Vision Quest Realty) over 10 years ago

Thanks for putting this information in one place and in such and easy to read and understand (and share!) format.

This is really great news, for us realtors and for the many seller's on the cusp of pre-foreclosure.  If this helps keep homeowners in their homes it will also help keep distress sales off the market.

Posted by Gail Szeluga & JoAnna Siminerio, Fostering Community Spirit Through Real Estate (Weichert Realtors - Manalapan - Marlboro) over 10 years ago

Bill - Very informative post !  Is good to see the specifics here and hopefully this program will help a lot of folks from losing their home.

Posted by The Somers Team, Real People. Real Dreams. Real Estate. (The Somers Team at RE/MAX Access) over 10 years ago

Jeff some of what you mention could be true. I sure hope not. There is some compensation given to the servicers in this program. From the website:

"Compensation is provided to the servicer that performs the loss mitigation or modification activities. Upon modification following successful completion of the Trial Period, and contingent on signing the program servicer agreement, the servicer will receive an incentive fee of $1,000 for each eligible modification meeting Home Affordable Modification guidelines.
Servicers will also receive Pay for Success fees – payable 12 months from the effective date of the Trial Period as long as the borrower continues in the program – of up to $1,000 each year for three years. Servicers will no longer receive Pay for Success incentive payments for Redefaulting Loans or for loans that have paid off subject to certain de minimis constraints (discussed below).
For loans modified while still current under the MBA delinquency calculation, the servicer will receive a Current Borrower One-Time Incentive of $500 following successful completion of the Trial Period.
Lenders that service their own loans are eligible for these incentives. Throughout this document the term “servicer” means the party that is responsible for performing the modification activities.
Similar incentives will be paid for Hope for Homeowner refinances."

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 10 years ago

Everyone thanks for all your comments. Lets hope this program is not a smoke screen as Jeff mentions. Keeping more foreclosures from hitting our markets is vital to starting a recovery.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 10 years ago

Great post! 2% huh?  Makes me want to go belly up for a while, take the gravy then resume business as usual!  Wonder how many people will purposely do this to get a government bailout?

Posted by Nevin Williams over 10 years ago

Super information Bill!

It would be most interesting to hear from the local banks/loan originators about what activity they may be seeing from this program.


- BostonKayakGuy

Posted by John Prescott, Top Real Estate Agent: Wellesley,Needham,Natick,Metrowest (Century 21 Commonwealth Wellesley) over 10 years ago

Bill - Clear research, thanks for bulleting the major points.  I cannot help but disagree with the "program" (i.e. the taxpayers) PAYING someone ($1000 principle reduction for five years) by way of incentive to make their mortgage payments on time.  There is something fundamentally wrong with that.  The taxpayers (not the government- as the program plan repeats again and again) pay the lenders an incentive to take lower payments on the mortgages, to cover some of the loss to investors.  Then the taxpayers pay a borrower for something they should be doing?  That part is ridiculous. 

Posted by Wendy Rulnick, "It's Wendy... It's Sold!" (Rulnick Realty, Inc.) over 10 years ago

Bill, I am hopeful along with most that this will keep a good number of people from foreclosure and we have to start somewhere.

Posted by Barb Szabo, CRS, E-pro Realtor, Cleveland Ohio Homes (RE/MAX Trinity Brecksville Ohio) over 10 years ago

Thanks for outlining the provisions of the loan modification program.  While this program may not help everyone who is struggling right now it should reduce the number of foreclosures hitting the market.

Posted by Patricia Beck, Colorado Springs Realty (RE/MAX Properties, Inc., GRI, CDPE) over 10 years ago

Bill - well done summary of this new program. Hopefully this will help a good number of people get out of trouble. Time will tel whether this can actually work and if lenders will be copperative.


Posted by Jeff Dowler, CRS, The Southern California Relocation Dude (Solutions Real Estate ) over 10 years ago

Hi Bill, thank you for posting this in such an easy way to follow.  I am glad to hear there are now some alternatives for homeowners experiencing financial hardship.   While I don't agree with the entire program, I think that its overall purpose is worthwhile.

Posted by Zilkia Olmeda-Martins, GRI, Realtor, San Antonio Texas Luxury Homes (RE/MAX North - San Antonio) over 10 years ago


Good information in an easy to understand format.  Thank you.

Posted by Doug Leugers, Doug Leugers Real Estate Advisors (Leugers Real Estate Experts) over 10 years ago

Bill... yes, I understand all of that. But even so, who is paying for these incentives?  Us?  The American public? And do investors still want to take those risks?  Just food for thought...

Jeff Belonger

Posted by Jeff Belonger, The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans ( Social Media - Infinity Home Mortgage Company, Inc) over 10 years ago

thank you for the info and the link to this program Bill

Posted by Stephen D White, E-Pro, ABR Cape Cod Real Estate (SDW Realty of Cape Cod) over 10 years ago

What a beautifully laid out post Bill! Great info and so easy to digest. Thanks.

Posted by AMBER NOBLE GARLAND - Top Real Estate Expert, Property Tax Appeal Specialist & Author, - The Agent You Can Trust To Deliver REAL Results! (Strategic Marketing Expert & Relocation Specialist Serving New Jersey and nationwide!) over 10 years ago

Jeff & Wendy - You certainly have good points but don't we pay the bill one way or the other? If nothing is done and foreclosures continue to hit the market at a record pace are we not all losing more money on our current residences? We all know what pressure these kind of homes put on market values. I think we will pay for it either way.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 10 years ago

Thanks for the post Bill, great information!

Posted by Team Honeycutt (Allen Tate) over 10 years ago

(((clap, clap)))

I noticed you allowed reblogging. I will take you up on it later in the week when you are off the feature board.

Posted by Missy Caulk, Savvy Realtor - Ann Arbor Real Estate (Missy Caulk TEAM) over 10 years ago

great post Bill - I just posted on NC foreclosure rate decreasing.  Perhaps we'll need less of the assistance.  Whether we agree or not agree let's all say a little prayer that it really does help those in need!

Posted by Lee & Pamela St. Peter, Making Connections to Success in Real Estate (Berkshire Hathaway HomeServices YSU Realty: (919) 645-2522) over 10 years ago

Hello Bill,

I'm so happy to see you are on top on this...ha ha! BTW - the 1st time buyer can claim the credit if they purchased between April 8 2008 and July 1 2009 & is extended to November 2009.

They can CLAIM the credit for 2008. If they make this choice,  the 15 year re-payment rule won't apply even thought you're claiming the crdit on your 2008 return.

I checked this out with my tax man; I urge you to also.


Posted by Linda Just over 10 years ago

EXCELLENT explanation Bill. I too will take you up on the reblog feature and you'll be my very first!

Posted by Colleen Fischesser Northwest Property Shop, A Tradition of Trust in the Pacific NW since 1990! (RE/MAX Advantage | Managing Broker) over 10 years ago

Hello Bill, (the above is because I wasn't signed in - sheesh!)

I'm so happy to see you are on top on this...ha ha! BTW - the 1st time buyer can claim the credit if they purchased between April 8 2008 and July 1 2009 & is extended to November 2009.

They can CLAIM the credit for 2008. If they make this choice,  the 15 year re-payment rule won't apply even thought you're claiming the crdit on your 2008 return.

I checked this out with my tax man; I urge you to also.

Posted by Linda Just, SFR (Leibowitz Realty Group - Palm Beach Gardens, FL) over 10 years ago

Hi Bill, Terrific overview of the loan mod proposal.  Lets give it a chance !

Posted by Bill Gillhespy, Fort Myers Beach Realtor, Fort Myers Beach Agent - Homes & Condos (16 Sunview Blvd) over 10 years ago

Bill.... first off, I don't think I did mention this, as others did, but this was a very nice overlay. But back to your statement... yes, we pay for it either way. And I am actually writing a blog on this now and should be done with it by 4 pm...   I think the pay now is worse than pay later and allow our markets to correct itself in some ways. Yes, you will have many that will agree and many that won't... all claiming to be experts. To me, that's called a coin flip. Which means that we need to do the research ourselves to determine this and not leave it up to the so-called experts that are puppets of the gov't. 

@ Wendy...  that is an assumption that they are using our monies and I will also try to shed some light on this when I write my blog.  As I told Bill, hopefully it will be out by 4 pm.. thanks

jeff belonger

Posted by Jeff Belonger, The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans ( Social Media - Infinity Home Mortgage Company, Inc) over 10 years ago


Great review of this information.  There is certainly a lot to learn about it.

I still think that unless we stimulate new demand for real estate and absorb the excess inventory, home values are going to continue to fall, and if they do, that is going to negatively impact these types of loan modifications.

Housing affordability is great, but underwater mortgages are a distinct concern.

Posted by Mark MacKenzie over 10 years ago

Linda there is no repayment rule as it a straighline tax credit unless the home is sold within the 1st three years. The extension time actually runs to December. You can see a complete breakdown of the 1st time buyers program by clicking the link I enclosed.

Jeff - I will look forward to seeing your article.

Everyone thanks for all you comments on the Obama loan modification program!

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 10 years ago

Hi Bill ~ I just reblogged you post (FYI) and I wish I could add the comments you  have received as well. Such great feedback going on here. I have learned so much. Thanks and I do hope this is not just a smoke screen as well.

Posted by Terrie Leighton, Reno Real Estate Agent ~ Selling Homes in Reno (Ferrari-Lund Real Estate ) over 10 years ago

Bill - Congratulations on the feature... Well Said!

I'm optimistic that this plan will help homeowners on the verge of losing their homes...

Too Good not to share!

Posted by Debbie Summers (Charles Rutenberg Realty ) over 10 years ago

Bill great job on making some points that I did not make on my blog, but as I stated on my blog, I don't think that there will be many helped by this.  Those that are good borrowers that have found themselves behind the 8 ball through circumstances that have become out of their control, might have a little hope, but that is not the majority that I talk to.

The past efforts that have been made have not only not worked, but FHA for example lied about the number of loans that were done under the FHA Secure Program.  What FHA did was to count ALL FHA Refinances as FHA Secure Refinance during the time the program was in effect.  The truth was very very few were FHA Secure and the majority were regular FHA Refinances.  I know this first hand because one of the lead guys for FHA here in Connecticut was making a presentation at an event that we were also participating in and approached him about the figures that he was using for Connecticut, and he had to finally admit that they were combining the figures.

I no that this is a Loan Modification and not a refinance, but the problem with this one as has been with all other programs is people being able to meet the guidelines once the criteria is applied to their spacifice situation.  Once you get down to actually do it is when you really see how unrealistic the guidelines for them to qualify.

I really really hope that I am wrong and that you are right. We should know the impact or no impact of this program fairly quickly.  My opinion is just that an opinion, and that and two dollars will get you a cup of coffee at Dunkin Donuts :)

Posted by George Souto, Your Connecticut Mortgage Expert (George Souto NMLS #65149 FHA, CHFA, VA Mortgages) over 10 years ago

Bill - There's not much I can add that hasn't already been did an outstanding job with such a clear and concise explanation of this information. 

Posted by Julie Dumaine-Russell (RE/MAX Alliance) over 10 years ago

Bill, Thank you for some great a way consumers can understand this as well.  I was aware of this but not familiar with how it would work and I appreciate the knowledge I gained from your post.

Posted by Laura Cerrano, Certified Feng Shui Expert, Speaker & Researcher (Feng Shui Manhattan Long Island) over 10 years ago

Great rundown. I am still a proponent of modification through a real estate contract law attorney who has expertise in this field (see My Blog). The government program leaves out a lot of homeowners, counts on the lender's to be honest and compliant, and will take months if not longer to train employees on the specific guidelines and implementation, and from the what I hear it is almost impossible for homeowners to get hold of someone who can help them if they are current on thier payments. Also, who is going to monitor compliance by the lender? Just my humble opinion throughout my experience working with homeowners, lenders, and attorneys since the beginning of this crisis.

I understand as well is it only a 5 year program and equity gains go to the lender? That part is still not clear to me.

Once again Bill, thank you for the link and the synopsis!


Posted by Mark Lee (Loan Audit Specialist) over 10 years ago

George - I really hope this is different. I think that you are right that we will know whether or not this works but I am not so sure it will be that quick. We are on top of this stuff daily because it is our business but those not in the industry don't seem to find out in many cases until it is too late.

I am not sure why you don't think it will help unless the program does not work as it was outlined. Are there not plenty of people that would like to refinance but can not because they have no equity but would rather stay in their home than sell? What guidlines do you think will squeeze people out of this program?

Terrie, Debbie, Donna, Carole - Thanks for your comments. Lets all hope that this loan modification program does save many who are facing the possibility of losing their home if they don't get a re-structured loan.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 10 years ago

Mark  - Two of your points including training of staff and actually reaching someone who can make a decision I am not surprised by. The part I am not clear on is what you said about the lenders being honest? Can you explain what you mean by that?

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 10 years ago

Sure, from my experience the lenders always do what is most beneficial to them. They are looking out for their best interest. I guess I wonder who is going to monitor them when there are issues about qualifying. The homeowner will be relying on someone who does not necessarily have their best interest in mind. In my experience the lenders are very misleading with information to their clients in order to keep the money coming in. I encounter so many people who have maxed out credit cards and their retirements because they were told they could not qualify for a modification, when in actuality I have seen them done when an attorney was involved.   Am I off on this question? Your thoughts?

Posted by Mark Lee (Loan Audit Specialist) over 10 years ago

oh my gosh BIll, I think you blew up the re-blog machine!  Way to go!  Tons of good info and so easy to understand, thanks for putting it together!

Posted by Janie Coffey, Uniting Extraordinary Homes w/ Extraordinary Lives (First Coast Sotheby’s International Realty) over 10 years ago

Mark I am all for using experts both when it comes to loan mods and short sales. I believe there are situations like you mention where people are taken advantage of.

Janie - Thanks. Hopefully this program will help those in need avoid foreclosure.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 10 years ago

Bill, this is EXCELLENT... you are so masterful at translating things into a language that I can sprechen, and this is no exception. However, I can't get rid of my migraine and am blaming it on the market and the merlot... here's to Loan Modification Programs (finally explained by Bill Gassett), and here's another to Metrowest MA Real Estate! Cheers!


Posted by Mara Hawks, Inactive-2012 REALTOR - Homes for Sale Auburn Real Estate, AL (First Realty Auburn ) over 10 years ago

Bill I guess my biggest concern is being able to get these people down to a 31% ratio.  2% is the floor and they can go to a 40 amortization.  If they are in trouble, their existing ratio is going to be A LOT higher then 31%.  Unless they have an outrageous interest rate right now, a 2% interest rate, and a 40 year amortization isn't going to do the trick.  Which would mean that on top of those two things the Lender would have to agree to a SUBSTANTIAL principal forbearance, which will of course have to be paid back in a huge balloon payment later.

They make sound like it is easy to get down to that 31% ratio, I assure you it will not be easy, if they can even get down to it at all.  I guess for me it is going to be, how much of a principal forbearance are lenders going to be willing to take.

Also the reason why I say that we will know soon whether or nt this will work, is because as soon as people start to get these modifications, they will start to get the "Yes" or "No" answers.  It the answers are coming back "Yes" then it works, if the answers are coming back "No" then it is a flop.  And those answers should not take to long to get.

Posted by George Souto, Your Connecticut Mortgage Expert (George Souto NMLS #65149 FHA, CHFA, VA Mortgages) over 10 years ago

Thanks for the breakdown.  This information will be in my next newsletter.  Great post.  So much to digest.

Posted by Gina Zimmerman, Fort Wayne Real Estate (North Eastern Group Realty) over 10 years ago

When this program helps an owner it will have more impact on the economy than all the billions we have sent to the financial institutions.

Posted by Terry & Bonnie Westbrook, Westbrook Realty - Grand Rapids Forest Hills MI Re (Westbrook Realty Broker-Owner) over 10 years ago

George what is your opinion on where most folks would fall as far as the debt ratio?

Mara, Gina, Terry - Lets hope the loan modification program does work and saves some people from losing their homes.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 10 years ago

Bill the people that I have talked to that have tried to qualify for previous programs, I was seeing front ratio's in the 50's & 60's and back ratios up to 85% and sometimes higher.  It was rare to see someone that was in trouble with there present mortgage that had a front ration in the 40's.  Let's let's keep in mind that the people that are applying for these programs are people that are in trouble and can't pay or soon will not be able to pay their mortgage.  If their front ration is even in the low 40's, they should not be in trouble.  So not being able to pay means higher than that.  I hope this makes it easier for you to see why getting down to a 31% ratio is going to be impossible in many cases.

If they wanted this to work they should have made that ratio higher, but that has been the problem with all of the previous programs as well, they set these guidelines at limits that are imposible for the majority to meet, and then say OH well we tried.

Posted by George Souto, Your Connecticut Mortgage Expert (George Souto NMLS #65149 FHA, CHFA, VA Mortgages) over 10 years ago

  You should have given yourself a gold star for this blog.  I did.  This program should help a number of home owners avoid foreclosure and be able to keep their home.  The government is really starting to show a little interest.

Posted by Kay Van Kampen, Realtor®, Springfield Mo Real Estate (RE/MAX Broker, RE/MAX) over 10 years ago

I'm skeptical about this program. Extending the term to 40 years really cuts into the ability of the homeowner to build any significant equity in the first 5-10 years of the mortgage. I'm also curious on whether or not they will adjust the outstanding principal for some areas (like Las Vegas) where prices have fallen more than 30% in the last year. To do that would help the current homeowner, but someone (most likely taxpayers) will have to absorb the loss.

Posted by John Novak, Henderson, Las Vegas and Summerlin Real Estate (Keller Williams Realty The Marketplace) over 10 years ago

I hope this works, but I agree with one of the comments above.  There is nothing that makes the lenders agree to these mods.  Sure there are incentives, but not very large ones.

Posted by Christine Donovan, Broker/Attorney 714-319-9751 DRE01267479 - Costa M (Donovan Blatt Realty) over 10 years ago

Thank you for the rundown on this - it does seem that it is a fairly lean modification, but I hope it will do some good!

Posted by Emily Lowe, Nashville TN Realtor (The Lipman Group | Sotheby's International Realty) over 10 years ago

George - Ok I see your point but I do not see why the government would even consider rolling out a program like this if nobody could use it? Why are they estimating that this program will help between 5-9 million people? Where do these estimates come from?

John - You are right a 40 year mortgage does not allow for equity growth but it is a lesser of two evils in my opinion. Whwn someone gets back on their feet they can always re-finance.

Christine - Mark Lee made a good point above. I bet using an attorney well versed in this subject matter would increase the odds greatly of getting the loan modification done.

Kay & Emily - I am hoping that what others have mentioned does not happen. It would be great if this loan modification program did slow down the foreclosure rate.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 10 years ago

Bill I don't know how they came up with this number, but they have come up with numbers in the past that were no where near the number of people they claimed would be helped.

In order to come up with an accurate number they would have to call everyone of those 5-9 million ask them for all of their financial information, analyze that information up against the program guidelines, and then those figures would mean something. I am sure that they not only did not do that, but did not even call any of them to find out their loan status.

My best guess is that the 5-9 million probably represents the number of loans that they feel were done in a time period were home prices and interest rates were high.

And as far as why would the government role out a program like this if nobody could use it?  I guess my answer would be why have they done that with the previous programs.  The proof exists that those programs that they talked up in the past year, just like they are talking up this one, helped very very few.  I hope this one has different results, but I just don't see it.

Posted by George Souto, Your Connecticut Mortgage Expert (George Souto NMLS #65149 FHA, CHFA, VA Mortgages) over 10 years ago

Good Morning, Happy St. Patrick's Day!

The government's plan is to help support the lenders to regain their losses with the forclosures and give a band aid to some home owners who will not regain any losses but hopefully get them through until the economy improves. So far every plan that comes out is beneficial to the lender in the long run, with the belief that if the lenders are doing well the economy will be doing well???? The bailouts help the corporations who have been irresponsible in hopes that they will change their ways? Why not  give the billions to homeowners to pay down their principals, lowering their balances, which lowers their payments, which prevents foreclosures???? This plan is basically set up for responsible homeowners only.

Currently, the attorney has been getting principal reductions on average of 20%, and lowered interest rates to make payments sustainable. He also changes the terms and works the loan into a fixed rate. This is helping the client. He does it by making it reasonable. Calculating the cost of a foreclosure, the estimated selling price in a short sale or auction,  along with the cost of a years maintenance. The bank loses more than they would by keeping the homeowner in the home even at a reduced principal. Now if that can be done through attorney intervention, why are the lenders not doing it for their clients on their own?

Just makes you wonder? More humblle opinion stuff only :0)

Posted by Mark Lee (Loan Audit Specialist) over 10 years ago

George - It is disappointing and I know you have a lot of experience with this. What you are saying makes perfect sense.

Mark - It does make you wonder. Of course there are many lender that will do whatever they can get away with. Like you, I think it is smart to have a pro in your corner. When I do a short sale, I don't try to manage everything myself. I work with an attorney who is well versed in short sales. It is a win-win.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 10 years ago

I just wish more homeowners knew this and moved in the right direction from the onset of trouble. The amount of adjustable rate loans coming to the end of their fixed period shortly, is staggering. Sadly people out to take advantage of the stressed homeowners have muddied the name of respectable loan modification options. Although there are never any guarantees, A professional, licensed, real estate contract law attorney is their absolute best bet.

I worry that people hoping the government program will help them, and exhaust all of their other resources while waiting for an answer, will end up losing their homes when told no by their lenders.

We need to spread the word to clients we come into contact with about reputable attorney options whether they qualify for the government program or not. This will ensure that they are given the full benefits due to them and the best solution possible. Not everyone can be helped by an attorney because the income is just not there.Choose an attorney with a flat fee retainer toresolution be it a modification, short sale, deed in lieu, or bankruptcy. Homeowners need someone who understands the law and can fight for their rights, and who will be honest with them about their mortgage reality.

I think we agree on this point. Educating clients in need is our responsibility. Thanks for putting the word out on this important matter. 

Posted by Mark Lee (Loan Audit Specialist) over 10 years ago

Bill, thank you for your clear and concise format to read how this is going to work!

Posted by Anonymous over 10 years ago

Wow Bill your post inspired a lively bunch of response from people here  Thanks for taking the time to summarize the plan. Providing information is part of the service we provide -I'm looking forward to learning more about it - thanks!

Posted by Teresa Berry over 10 years ago

People do so many things to come out of debt. I took service from This is an amazing site. They tailored a plan for me and negotiated with the bank to cut interest rate 5.15% from the original 7%.

Posted by Pothik over 10 years ago

Pothik - Congrats that is great news. Glad you were able to get yourself a better rate.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 10 years ago

Job well done Bill.  This is a nicely put together and extremely helpful post.  Congrats on your well deserved gold star!



Posted by Robert and Lisa Hammerstein -201-315-8618, Bergen County NJ Real Estate (Keller Williams Valley Realty) over 10 years ago

Lisa - Thanks! I really appreciate the compliments.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 10 years ago

Bill, thanks for the summary of this. I have a friend who is losing her home whom I am going to share this post with. Congrats on the feature!

Posted by Sharon Alters, Realtor - Homes for Sale Fleming Island FL (Coldwell Banker Vanguard Realty - 904-673-2308) over 10 years ago

Great info. I really hope the Making Home Affordable program will be a success, else the mortgage problem will just probably worsen to the point of no return.

- Imee

Posted by Imee over 10 years ago

Sharon - Thanks. There are so many people that don't do anything and just let their homes go to foreclosure. It is sad.

Imee - I hope the program helps as well.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 10 years ago

One of the best tools I've found on the Obama program is a calculator I found on

I put in my numbers and got detailed results on what incentives I could get from a modification.  It's made it easier to talk to Countrywide.

Posted by Jim over 10 years ago


We applied for the HMP through our loan servicer, Aurora Loan Services, on Monday.  If this program does work for us, it will save us from a short sale or foreclosure.  It would be a true blessing and help us financially from now on. 

I have read the Announcement 09-05 on and it looks like our main barrier to qualifying may be how the underwriter determines the Net Present Value (NPV) of our home and how that affects their calculation of if the invester would be better off to foreclose or modify our loan.  I am concerned that they will value our home at a higher amount than what they actually could get for the home.  We paid $410 for a 1980's fixer-upper in the Sarasota/Bradenton market in March 2006.  Great timing!  Equivalent houses in our neighborhood have now sold for $215,000 and $189,000.  Our property appraiser has included our lanai in the living space of our home, so our 1,800 sq. ft. house appears to have 2,400 square feet on computer data bases. 

Do you think they will get actual physical appraisals for houses under this plan, or do computer appraisals for values?  If they will be doing computer appraisals, how can I get our actual square footage to the underwriter? 


Posted by Amy over 10 years ago

Amy in my experience most lender will actually want to visit the home and will not just do a drive by. Hopefully this is the case in your situation as it sounds like there is a clear discrepancy in the square footage. If they just do a drive by appraisal I would make sure you make the error clear to the bank.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 10 years ago

People do so many things to come out of debt. I took service from This is an amazing site. They tailored a plan for me and negotiated with the bank to cut interest rate 5.15% from the original 7%.

Posted by road runner over 10 years ago

Road Runner - Congrats on getting your loan modified...that is great news!

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 10 years ago

If you can no longer afford to make your monthly loan payments, you may qualify for a loan modification to make your monthly Behind On Mortgage Payments more affordable. Millions of borrowers who are current, but having difficulty making their payments and borrowers who have already missed one or more payments may be eligible.

Posted by Massachusetts Loan Modification Program over 8 years ago

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