Do You Qualify for New Federal Mortgage Aid Plan?

Do You Qualify for New Federal Mortgage Aid Plan?

Article by Roy Primm

Wall street bankers gets a bailout, AIG gets another one, they’re even talking about giving General Motors help. But the main question taxpayers, whose paying for these multi-billion dollar  bailouts, want to know is… what about homeowners?

That’s been the biggest complaint federal government officials receive from angry and confused homeowners through scathing phone calls, letters and emails. With the longest and most expensive election in history over, government officials can focus more on helping to establish a mortgage bailout plan.

With a record number of homes falling into foreclosure each month, the federal government has launched the most sweeping action so far to help homeowners. The new mortgage aid plan will help streamline and speed up the process of negotiating hundreds of thousands of loans that are delinquent. Most of these troubled loans come under the Freddie Mac and Fannie Housing Agencies.

“If this mortgage bailout model works, the government may expand it to include a larger number of homeowners,” comments one government  official. This new subprime bailout plan, designed to slow the tide of foreclosures, features extended payment periods and reduced interest rates for homeowners who qualify. As of this writing the mortgage aid plan will go into effect on December 15, 2008.

Here’s how to tell if you qualify for this mortgage bailout program.

1. Homeowner will have to be at least 3 months behind on their mortgage.2. Homeowner will have to owe at least 90% of their home’s current value. (For example, if your home is worth 0,000  you have to owe at least ,000).3. Homeowner must occupy the home.4. Homeowner must not have filed bankruptcy.

Homeowners who qualify will receive all or some of the following…

1. An interest rate drop, allowing the homeowner to pay no more than 38% of their income toward housing cost.2. Receive a loan extension from the traditional 30-year term to 40 years.3. To defer or delay the principal, interest free.

This government program represents the biggest step yet in helping cash strapped homeowners avoid foreclosure. Most of these troubled  loans, packaged into a mix of investments, has proved difficult to sort through. It’s has taken the government longer to work out a plan to satisfy both borrower, lender and investor – all at the same time.

Unlike traditional loans of the past,  multiple investors purchased these loans. Because of having multiple owners they were more difficult to modify, as opposed to the traditional one owner loans, known as “whole loans”. More lending institutions are signing on to this plan, as opposed to previous plans. Many banks are also launching there own plans. For example, more banks are looking into temporarily halting foreclosures for owner occupied  homes for qualified homeowners.

Other lenders are expanding their modification programs to help borrowers who are not behind but on the verge of falling behind, one of the first in the industry.  Note: Previously most lenders would balk at modifying your loan until your were at least 2- 3 months behind.

President-Elect Obama has called for a 3-month moratorium on foreclosures, to give the government time to work out a more extensive mortgage bailout plan. I’ll continue to keep you informed in future issues as this and other mortgage aid plans go into effect.

About the Author

Roy Primm has written dozens of articles showing others how to reduce your home ownership cost. For more tips go to

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