Economy

The U.S. Department of Treasury announced the Making Home Affordable Plan, as part of President Barack Obama's continuing endeavor to resurrect the U.S. economy. Companies are also helping to restructure mortgages to aid the faltering housing market and in reaction to growing unemployment. The plan is designed to aide 7-9 million homeowners in keeping their homes, and to stop the destructive tide of foreclosures. There are two separate programs, The Home Affordable Refinance and TheHome Affordable Modification - both have been created to help different groups of homeowners.

The Home Affordable Refinance (expires June of 2010) helps:

• 4 to 5 million homeowners
• Fannie Mae or Freddie Mac mortgage holders
• People with proven history of responsibly paying the mortgage
• Homeowners to be able to secure new mortgages despite the decline in their home value
• Those with either fixed rate 30 year mortgages or adjustable rate mortgages, who are being encourage to secure new mortgages to take advantage of the historically low mortgage rates and more stable mortgage options
• Only loans contracted before January 1, 2009 qualify

The Home Affordable Modification helps or requires:

• 3 to 4 million at-risk homeowners
• Reduce monthly mortgage payments
• Work in conjunction with an improved Hope for Homeowners program
• Only loans contracted before January 1, 2009
• Maximum principal limit$729,750 for first-lien loans on owner-occupied properties only
• Owner-occupied properties with 2-4 units that may qualify for higher limits
• Documentation required by all borrowers include IRS 4506-T, two most recent paystubs, most recent tax return, and signed an affidavit of financial hardship
• Ownership of property verification through credit reports, and investor-owned or condemned properties will not qualify
• Financial incentives to be paid to lenders and loan providers who modify the mortgages of at risk borrowers who are currently up to date on their mortgage payments
• Modifications that start immediately and until December 31, 2012
• Only one loan modification can occur under the program

Homeowners seeking to take advantage of these programs can contact loan providers now, as they can start to modify eligible mortgages immediately. Due to the sheer volume of qualified program applicants, please expect delays in response time.For complete program details visit the Department of Treasury.

The current economic crisis has everyone on edge. Banks are collapsing, unemployment is rising, inflation shows signs of rising, and the government is working over-time to stop the bleeding and get the nation's economy back on its feet -- and those efforts are not only costing taxpayers trillions of dollars, but their success is not guaranteed, and will not be felt for a time to come.

One big factor in the financial meltdown is the mortgage implosion. Home prices became wildly overvalued, and when that bubble burst millions of Americans found themselves with enormous mortgages on homes that were worth less than the mortgage itself.

That situation is called being underwater, and for many people with an underwater mortgage -- also known as an upside down mortgage -- they get so stressed about throwing their money after something that's worth less and less that they just up and walk away from the home and the mortgage. As part of the government's efforts to correct the economy, plans are available and in the works to help refinance upside down mortgages.

President Barack Obama has signed legislation creating a fund that will help people pay their mortgages. It will allow people with upside down mortgages to make their payments less painfully, and to hopefully stem off foreclosures.

In addition, a $200 billion dollar fund has been created to help mortgage giants Fannie Mae and Freddie Mac help people with upside down mortgages or underwater mortgages refinance the mortgage loans on their homes.

If you have an upside down mortgage, don't walk away from your home and your commitment to the mortgage.

There is government help for people with upside down mortgages, and this help could conceivably help you get through your mortgage payments over the next few years until the real estate market comes back, and your home's value starts to get back to the price that you paid for it.

To learn more about government plans for refinancing upside down mortgages, be sure to contact a mortgage professional or a consumer advocacy group.

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