money-houseAThe administration’s housing plan provides two types of assistance that are designed to help make mortgages more affordable for up to 9 million homeowners: refinancing and loan modification.

Special refinancing program. Many homeowners with more than 20 percent equity in their home can refinance their mortgage at today’s low rates and decrease their monthly payment by hundreds of dollars. But people whose home values have dropped significantly often have a tough time finding a lender that will refinance their mortgage, especially if they owe more than 80 percent of their home’s current value. This special program will help those people refinance into cheaper loans. To qualify, your loan must be owned or guaranteed by Fannie Mae or Freddie Mac, and you must not have missed any loan payments in the past 12 months. The deadline for refinancing under this program is in June 2010.
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Your mortgage may be owned or guaranteed by Fannie Mae or Freddie Mac even if you send your monthly payments to a different mortgage company (the mortgage servicer). Ask the servicer whether Fannie or Freddie owns your loan, or you can look up your loan in the Freddie and Fannie databases at http://MakingHomeAffordable.gov.

Loan-modification program. This program is designed to help people who are struggling to make mortgage payments. The government will provide incentives for lenders to lower borrowers’ monthly mortgage payments to 31 percent of their gross monthly income, either by lowering the interest rate to as little as 2 percent or by extending the terms of the loan up to 40 years. Lenders can also lower the amount of principal owed. To qualify, the loan must have originated on or before Jan. 1, 2009, the principal balance cannot exceed $729,750, and the home must be a primary residence. Borrowers also have to document income and sign an affidavit of financial hardship. The modification must take place by Dec. 31, 2012.