Eligible for Government Refinancing? Loan Modification Part 2

Struggling but not behind

Do you feel buried by your mortgage? Refinancing could help.

In Part 1 of this Loan Modification series, I talked about the first part of the government’s Foreclosure Prevention Plan. The modification program is available to homeowners who are already three months behind on their mortgage.

If you are not behind on your mortgage but are struggling to make payments, you might be eligible for the Refinance portion of the Foreclosure Prevention Plan.

Fannie and Freddie customers

The federal government now owns majority stock in the nation’s biggest mortgage-holding companies, Fannie Mae and Freddie Mac. The federal Foreclosure Prevention Plan offers homeowners whose mortgages are held by these companies to refinance if they are having a hard time making payments on their personal loans.

Payment to income ratio

The main goal of the foreclosure prevention plan is to get homeowners’ payments to 31 percent of their monthly income. If your payments are already less than 31 percent of your income, you likely will not qualify.

Only for struggling homeowners

However, if you are paying more than that, you could be eligible for refinancing. The catch is, you must provide proof of hardship. Providing proof of hardship is required to take advantage of either the Loan Modification or the Refinancing program.

I go into detail about proving hardship in Loan Modification Part 3.

Refinancing basics

The government has dedicated $75 billion to helping homeowners make payments. In short, this money will help make up the difference for homeowners whose mortgages can’t be adjusted to only 31 percent of their monthly income.

I will go into detail about how Loan Modification and Refinancing work under the new federal program in Loan Modification Part 4.

Eligibility forms

Online forms can put you in touch with financial experts.

If you still have questions about whether you are eligible for the federal refinancing program, you can fill out a form at makinghomeaffordable.gov.

If you want to be put in touch with a loan modification counselor, fill out the form at our mortgage loan modification page.