Public- and Private-Sector Mortgage Help

Homeowners may be able to get foreclosure-prevention help through the Obama Administration’s new Homeowner Affordability and Stability Plan, which offers homeowner relief programs through the Federal Housing Administration or the private-sector Hope Now Alliance.

These measures make it possible to either modify or refinance existing mortgage loans. Here are the basic details.
 

Loan Modification Criteria
 

If you’re struggling to pay the mortgage because the interest rate has risen or your income has decreased, you may qualify for a Home Affordable Modification. Even if you’ve missed one or more loan payments, you may still be eligible.

This effort is part of the Making Home Affordable Program created by President Obama to help people who are strapped by their current home mortgage payments. It’s also known as the Homeowner Affordability and Stability Plan.

Only your lender or loan servicer can tell you for sure if you qualify, but you could receive help if you meet the following criteria:

• You have a single-family home that is your primary residence.
• The amount you owe on your first mortgage is no more than $729,750.
• You got your current mortgage on or before January 1, 2009.
• Payments on your first mortgage (including principal, interest, insurance, and taxes) are more than 31 percent of your current gross income.
• You can make modified loan payments during a trial period of at least three months.
• To get a Home Affordable Modification, you’ll usually have to show you have enough income to make reduced payments on time.

Loan Refinancing Criteria
 

If you’re up to date on your loan payments but can’t refinance your home because its value has dropped, you might quality for a Home Affordable Refinance. This is another aspect of the Making Home Affordable Program.

Again, only your lender or loan servicer can say if you’re eligible, but you could obtain refinancing if you satisfy the following conditions:

• You own a home with one-to-four units.
• You have a loan that Fannie Mae (1-800-FANNIE) or Freddie Mac (1-800-FREDDIE ) owns or guarantees.
• You have the ability to afford the new mortgage debt.
• You are current on your mortgage payments.
• Your mortgage balance is no higher than 125 percent of your home’s estimated current value.

To find out more about these loan modification and refinancing programs, go to the U.S. Treasury Department’s www.financialstability.gov Web site. Also visit www.makinghomeaffordable.gov.

Hope for Homeowners
 

The FHA’s Hope for Homeowners Program (909-895-4074) lets borrowers shrink their mortgage by refinancing with an FHA loan. Designed to help a variety of homeowners, you can be struggling to pay but are still current with your payments, in default, and even in certain stages of foreclosure. Here are a few details:

• Loans of up to $550,440 are available.
• Loans will be for 90 percent of the house’s appraised value.
• By doing this, FHA essentially gives homeowners 10 percent equity up front.
• If you have a second loan on your home, the lender holding it has to release the lien against the home.
• You can’t get a new second mortgage for five years, though, unless you have to make emergency repairs.

Hope Now Alliance
 

Mortgage servicers, trade associations, and housing counseling agencies participate in the Hope Now Alliance (1-888-995-HOPE), a private-sector effort to modify home loans and adjust payment plans for hard-pressed homeowners.

This initiative brings borrowers and lenders together to work out loan terms that both parties can accept. Successful arrangements have included:

• postponing missed payments until the end of the loan term
• short-term interest-rate reductions
• extended repayment terms