Well, I guess it’s not the holidays anymore, because they have quietly ended their ban and are beginning to send notices of default and sale where applicable.

In a brief statement, Fannie Mae spokesman, Brian Faith said that they will take into account the “Making Home Affordable” program which says that a foreclosure can only occur on a Fannie Mae loan if the loan servicer has determined that the home owner is ineligible for an affordable modification.  Unfortunately, such determination is in the hands of the lender or servicing company and not where it needs to be: held by someone impartial like a bankruptcy judge.

To qualify the property must be owner occupied, homeowners must have a solid payment history, and the existing mortgage must be owned by Fannie Mae or Freddie Mac.  To find out if your confoming loan qualifies visit Fannie Mae at www.fanniemae.com/homeaffordable and Freddie Mac at www.freddiemac.com/avoidforeclosure.

Having a second mortgage or line of credit does not disqualify a homeowner and only the first loan counts toward the 105%.  However, all junior lien holders must agree to subordinate to the new first mortgage and borrowers can not take cash out of the refinance to pay other debts.  Only transaction costs associated with the refinance may be included in the refinance amount.

Finally, if a borrower is delinquent in paying their mortgage they are not eligible for the refinancce option and should contact their loan servicer to see if they qualify for a Home Affordable Modification. The Modification option of the Obama plan will be discussed in an upcoming post.