Easy explanation of homeowner bailout | Kevin Colby: News and Political blog

Understanding the homeowner bailout

foreclosure2 Understanding the federal homeowner bailout may be confusing so here is some information for you:

There are two scenarios under which the “Making Home Affordable” program could possibly work for you. The first is if you’re behind on your mortgage, and the second is if you’re current.

Let’s examine the first scenario. If you can not afford payments and can not refinance for whatever reason, you will have the opportunity to have your loan temporarily reduced to 31% of your monthly income. This applies to homes valued at up to $759,750 in most areas of the country. Your interest rate may drop to as low as 2% for the next 5 years!

Under the second scenario, those who are current on a mortgage held by Fannie Mae or Freddie Mac will also be allowed to refinance — as long as they’re not more than 5% upside down in their home. (Note: This does not include a second mortgage). The new loan you’ll get will likely be re-written to an interest rate of around 5.125%.

To determine if you’re loan is held by Fannie Mae or Freddie Mac, simply follow our web links or call them directly. Contact Fannie at 1-800-7-FANNIE and Freddie at 1-800-FREDDIE from 8 a.m. to 8 p.m. ET. Start with Fannie Mae — they’re the larger of the two.

And you may also be eligible for assistance even if your loan is not with Fannie or Freddie. That’s up to your individual lender, so get in touch with them to find out if you qualify.

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