Track record of Obama's mortgage aid

By Janna Herron AP Real Estate Writer The outlook was bleak. Hundreds of thousands of homeowners were in danger of losing their homes two years ago and the government mortgage program at the time had helped only two dozen of them. To help stem the foreclosure onslaught, the Obama administration rolled out its mortgage modification program in March 2009 to help lower monthly mortgage payments for financially strapped homeowners. Borrowers who qualify can receive an interest rate as low as 2 percent for five years and a longer repayment period. The modification only becomes permanent once the homeowner makes three payments on time and completes the required paperwork. So far through the end of last year, nearly 522,000 homeowners had received a permanent loan modification using the government program. That's a small dent in the overall foreclosure crisis. About 5 million borrowers are at least two months behind on their mortgages. High unemployment and loans that exceed the value of their homes are expected to push 1.2 million homeowners into foreclosure this year. That's the most since the housing crash, according to foreclosure tracker RealtyTrac Inc. Homeowners who owe more than the value of their house face the highest risk of losing their property. Their options are limited because they can't pay off the debt by selling or refinancing if they run into trouble. About 10.8 million, or 22.5 percent of homeowners with a mortgage were underwater in the third quarter last year, housing data firm CoreLogic reported, with the highest concentrations in Nevada, Arizona, Florida, Michigan and California. That number is expected to rise because most economists predict housing prices will fall another 5 percent to 10 percent before bottoming mid-year. There are several mortgage aid programs sponsored by the government. Borrowers whose mortgages are held by Fannie Mae or Freddie Mac and who haven't missed a payment may qualify for a Home Affordable Refinance that allows them to reduce their interest rate. That's possible even if their home's value is less than their mortgage. For the worst scenarios, the government has a program to help facilitate a short sale, where a home is sold for less than the outstanding mortgage. Or, it can help with a deed-in-lieu of foreclosure, where the lender takes back the home without going through the foreclosure process. Although both scenarios hurt a borrower's credit, the hit isn't as bad as having a foreclosure on their record. Visit www.makinghomeaffordable.gov to see if you are eligible for any of these programs. Otherwise, contact your lender for non-government mortgage aid programs or a government-sponsored housing counselor at http://tinyurl.com/4jpyl8q . Published: Mon, Feb 14, 2011