The federal loan modification program, Making Home Affordable, provides a way for struggling homeowners to lower their monthly mortgage payments. Qualifying applicants can receive an interest rate reduction, making their new rate as low as 2% for a minimum of five years. They can also receive an annual incentive of up to $1,000, applied to their mortgage, for five years.

Many HELOC holders are now interested in receiving relief from their second mortgages. However, the federal program does not modify the loans for any second liens.

Materials provided by the government’s site FinancialStability.org, explain it succinctly:

Q: I have two mortgages. Will a Making Home Affordable Modification reduce the payments on both?

A: Only the first mortgage is eligible for a modification.

Although the second mortgage won’t be modified, it won’t prohibit homeowners from receiving help with their their original loans:

Q: I have a second mortgage. Am I still eligible?

A: Yes, but only the first mortgage is eligible for a modification.

So, in a nutshell: The government won’t modify a HELOC, but having a HELOC won’t hurt your chances of a first mortgage modification.

See Also:

Un-Freezing a HELOC

Answers to Common HELOC Questions

Tags | Heloc, home equity line of credit, Making Home Affordable, mortgage crisis, mortgage modification