More Housing Details Are Pending, but First Some Answers

February 19, 2009
By T.S. Bernard

The Obama administration’s housing plan aims to help millions of homeowners who fall into two categories: either they have been struggling to pay their mortgages or they have been shut out of the refinancing market.

The initiative gives lenders incentives to modify the mortgages of the three million to four million homeowners on the brink of foreclosure or who cannot make their monthly payments. The goal is to reduce the payments to levels they can afford.

The plan also aims to help the four million to five million homeowners who have been unable to refinance their mortgages because their home values dropped, erasing much or all of their home equity. Some of them would have a fresh shot at refinancing.

While the administration offered some details about the programs, more information will be available on March 4, when the programs begin.

Below are answers to some of the questions that troubled borrowers may have.

REFINANCING

Q. Am I eligible?

A. Your loan must be owned or guaranteed by Fannie Mae or Freddie Mac, the government-controlled companies that together account for about half of the mortgage market. The problem is that many of the most problematic loans do not fall under the Fannie-Freddie umbrella. You can call your mortgage lender after March 4 to find out if your loan qualifies.

You will need to have “sufficient income to make the new payment and an acceptable mortgage payment history,” according to documents about the initiative. Precise details will be released next month.

In the meantime, you should get your financial house in order. That means collecting the paperwork you will need to refinance, including information detailing your gross monthly income; most recent income tax returns; information about any second mortgages; payments made on credit cards if you carry a balance; and payments on other loans, like auto or student loans.

Read the rest of the story here. . .