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Questions, answers about the program

February 19, 2009
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Have more questions? Here are some answers adapted from the White House. For more details, go to www.whitehouse.gov.

Q. I pay my mortgage on time, but falling home prices have made my loan worth more than my house, so I can't refinance. Will this plan help me?

A. Eligible borrowers who are current on their mortgages but who can't refinance to lower rates may be able to refinance to a 30 or 15 year fixed-rate loan. Eligible loans include those where the new first mortgage (including any refinancing costs) will not exceed 105 percent of the current market value of your home. If your home is worth $200,000 but you owe $210,000 or less, you may qualify.

Q. How do I know if I am eligible?

A. The government will disclose details on March 4, when the program starts. Criteria include having sufficient income to make the new payment and an acceptable mortgage payment history.The program is limited to loans held or securitized by Fannie Mae or Freddie Mac.

Q. What are the interest rate and other terms of this refinance offer?

A. All loans refinanced under the plan will have a 30- or 15-year term with a fixed interest rate. The rate will be based on market rates in effect at the time of the refinance and any associated points and fees quoted by the lender. The refinanced loans will have no prepayment penalties or balloon notes.

Q. My loan is scheduled for foreclosure soon, so what do I do?

A. Contact your mortgage servicer or credit counselor.Many mortgage lenders have expressed their intention to postpone foreclosure sales on all mortgages that may qualify for the modification in order to allow sufficient time to evaluate the borrower's eligibility.

Q. How do I know if I qualify for a loan modification?

A. In general, you may qualify for a mortgage modification if you occupy your house as your primary residence; your monthly mortgage payment is greater than 31 percent of your monthly gross income; and your loan is not large enough to exceed current Fannie Mae and Freddie Mac loan limits.

Q. How do I apply for a modification?

A. You may not need to do anything at this time. Most mortgage lenders will evaluate loans in their portfolio to identify borrowers who may meet eligibility criteria. After March 4 they will send letters to potentially eligible homeowners, a process that may take several weeks.

Q. Is my lender required to modify my loan?

A. Mortgage lenders participate in the program on a voluntary basis. But the government is offering substantial incentives, and it is expected that most major lenders will participate.

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