The Obama administration’s housing plan will offer two types of assistance that are designed to help make mortgages more affordable for up to 9 million homeowners.   The plan includes two parts:   refinancing and loan modifications.

Refinancing. Homeowners with more than 20 percent equity in their home can easily refinance their mortgage at today’s low rates and decrease their monthly payment by hundreds of dollars. But people whose home values have dropped significantly will have a tough time finding a lender that will refinance their mortgage. This refinancing program will help those people refinance. To qualify, your loan must be owned or guaranteed by Fannie Mae or Freddie Mac, and you must not have missed any loan payments in the past 12 months. The deadline for refinancing under this program is in June 2010.

Chances are your loan is owned or guaranteed by Fannie Mae or Freddie Mac even if you send your monthly payments to a mortgage servicer. Ask your loan servicer whether Fannie or Freddie owns your loan, or look up your loan in the Freddie and Fannie databases at http://MakingHomeAffordable.gov.

Loan-Modification. This program is designed to help people who are struggling to make their current mortgage payments. The government will provide incentives for lenders to lower your monthly mortgage payments to 31 percent of your gross monthly income, either by lowering the interest rate to as little as 2 percent or by extending the terms of the loan up to 40 years. To qualify, the loan must have originated on or before Jan. 1, 2009, the principal balance cannot exceed $729,750, and the home must be a primary residence. Borrowers also have to document income and sign an affidavit of financial hardship., and the modification must take place by Dec. 31, 2012.

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