We get this from the fine folks over at CNNmoney.com:
The Bush administration on Tuesday unveiled a new program to modify mortgages and stabilize the battered real estate market, but the plan stops short of providing direct government financial help to at-risk homeowners.
The plan centers on Fannie Mae and Freddie Mac, which between them own or back about 31 million mortgages worth a combined $5 trillion. The federal government took over the firms in September due to mounting losses on their portfolios of mortgages.
Homeowners who are 90 days or more late in their mortgage payments, who live in the home on which the mortgage was taken and have not filed for bankruptcy are eligible – assuming that loan is owned by Fannie or Freddie.
Their mortgage payments would be adjusted through lower interest rates or longer repayment schedules with the goal of bringing payments below 38% of monthly household income.
See the AP story on this plan here. Here is a quote from that article:
To qualify, borrowers would have to be at least three months behind on their home loans, and would need to owe 90 percent or more than the home is currently worth. Investors who do not occupy their homes would be excluded, as would borrowers who have filed for bankruptcy.
Borrowers would get help in several ways: The interest rate would be reduced so that borrowers would not pay more than 38 percent of their income on housing expenses. Another option is for loans to be extended from 30 years to 40 years, and for some of the principal amount to be deferred interest-free.
This is a different approach that the Hope For Homeowners (H4H) plan that has largely failed so far. The idea here is to simply lower payments for people who can’t keep up by either reducing interest rates or lengthening the term or both. Banks will be much more interested in this sort of plan than they were in the H4H plan because they are not required to eat huge losses when they modify loans. If it works, this will likely keep a lot of people in their homes and that will be good for everyone.
You must have a Fannie Mae or Freddi Mac backed loan to qualify for this plan and it sounds like it only applies to people who have fallen at least 90 days behind on payments. Contact your lender if you are that far behind and see if they are willing to modify your loan.