Making Homes Affordable Review

I am very disheartened. In March, the government introduced a program called Making Homes Affordable. Under this program, homeowners would be able to refinance their homes to get a better interest rate and a more stable loan. Everything that I have read about this program says that it benefits people who are doing the right thing, making their payments, and just do not have any equity in their homes. It sounds great, right? I say NO!!!

My husband and I are in a situation, probably a lot like many other homeowners. My husband was in the military, and got stationed in an area that was part of the booming real estate market. In the height of the market, we bought a house that we could afford, even though we were approved for more, and we did 100% financing. This left us with 2 liens, under the 80/20 program. We were not eligible to use our VA loan, because our loan amount exceeded the cap for VA loans.

So what is an 80/20? Basically, you will hold 2 liens on your home: one that is 80% of the cost of your home and another is 20% of the cost of your home. The 80% loan is a normal interest rate, typical of what the interest rates are in the current market when you bought your home. The 20% loan has an inflated rate, about 3 points higher than the 80% loan...

My husband and I have been trying to refinance our home since my husband got home from Iraq, in November of 2008 with no avail. Under this program, our mortgage would actually go up, and we would not get a much lower interest rate. They will only refinance our first lien, and keep our second lien at its inflated interest rate.

So where does this leave us? Stuck in a variable rate, interest only balloon loan. We cannot refinance with a general loan, because we have negative equity in our home. We can't refinance under the Making Homes Affordable program, because we would lose money. I was actually told by the bank that unless we are actually behind in our mortgage payments, they cannot do anything for us. So really, who is benefitting here? I do not believe the propaganda that the Making Homes Affordable program is distributing. They claim that this program is intended for people in our situation, and not for people who are already struggling. This is clearly not the same picture that my bank has painted for me. My bank told me to call back once we are actually struggling otherwise there is nothing that they can do for us. But, they did thank us and encouraged us to have a great day.

Reference:
http://makinghomeaffordable.gov/