The Making Home Affordable loan modification program is now up and running. Learn how to find out if you're eligible.

If you're in need of a loan modification, trying to get reliable advice can be like searching for a good radio station in the desert. All you hear is noise and a few snippets of songs you don't understand. The federal government and Fair Isaac Corporation are addressing this loan modification confusion with separate websites that determine your potential eligibility for the Making Home Affordable programs.

Obama loan modification

The Obama administration has established two separate programs that offer mortgage help. They're called Home Affordable Modifications, and Home Affordable Refinancing. Home Affordable Modifications, also called Obama loan modifications, are designed for borrowers who can't afford their existing mortgage payments. Home Affordable refinancing, sometimes called the Obama 105% refinance, is for homeowners who are making mortgage payments, but can't refinance because their home has dropped in value.

The initial eligibility requirements for an Obama loan modification are:

  • Your loan amount must be equal to less than $729,750.
  • You must have difficulty paying your current mortgage payment due to a change in your interest rate or your financial circumstances.
  • You must have funded your mortgage prior to January 1, 2009.
  • Your first mortgage payment must be greater than 31 percent of your gross income.

Fannie Mae or Freddie Mac? is the official website for the federal programs. It features two questionnaires; one checks your potential eligibility for the Obama loan modification, and the other checks your eligibility for the Obama 105% refinance. For the refinancing questionnaire, you need to specify whether Fannie Mae or Freddie Mac owns or guarantees your mortgage. You may not know this information, since Fannie Mae and Freddie Mac generally operate behind the scenes. Use the loan look-up links provided to verify your loan's status with these agencies. is sponsored by myFICO, the Homeownership Preservation Foundation, and Money Management International (MMI), a non-profit credit counseling group. It features one questionnaire with 15 questions. Your responses are used to determine your potential eligibility for either the Home Affordable Modification or the Home Affordable Refinancing. After you complete the mortgage questionnaire, you'll be offered free access to MMI's HUD-approved credit counselors.

Loan modification caveats

Confirming your eligibility for a loan modification and actually getting one are, unfortunately, two different things. If either site says that you're eligible, contact your loan servicer. You'll need to document your income, savings, assets, mortgage, and other debt balances. You'll also need to describe how and why your financial circumstances have changed since you funded your mortgage. Be prepared to detail any job loss, divorce, or illness you have suffered.

The Making Home Affordable programs should help millions of homeowners stabilize their finances in the next year. To tune out the noise and find out if you're eligible, check with or today.

Published on May 25, 2009