Highlights of Obama’s Making Homes Affordable

The Obama administration launched what it calls the "Making Home Affordable" initiative today: a $75 billion loan modification program, which runs through 2012.

Here are the highlights:

• Mortgages for single-family properties that are worth more than $729,750 are excluded.
• Interest rates can be lowered to as low as 2 percent and then if necessary; the term of the loan can be extended to a maximum of 40 years.
• The home must be a primary residence (verified with tax return, credit report, and other documentation such as a utility bill). The home may not be investor-owned.
• The home may not be vacant or condemned.
• Borrowers must provide their most recent tax return and two pay stubs, as well as an "affidavit of financial hardship" to qualify. You need not wait to become delinquent with your payments -- a plan can be put in place as soon as you think you may have trouble making your mortgage payment.
• Borrowers in bankruptcy are not automatically eliminated from consideration for a modification.
• Borrowers in active litigation regarding the mortgage loan can qualify for a modification without waiving their legal rights.
• Borrowers are only allowed to have their loans modified once, and the program only applies for loans made on Jan. 1, 2009 or earlier.
• Eligibility is restricted to loans originated on or before Jan. 1, 2009.
• Incentives are provided to extinguish second liens on loans modified under the program.
• Homeowners are eligible for up to $1,000 of principal reduction payments each year for up to five years. Monthly payments can come down to as low as 31 percent of the borrower's gross (pre-tax) income.
• Separately, up to 5 million borrowers who have mortgages held by government controlled mortgage finance giants Fannie Mae and Freddie Mac should be eligible to refinance through June 2010.

Borrowers can find out if their loan is owned by Fannie Mae in one of two ways:

1. Call your current mortgage lender or servicer. The phone number should be on your monthly mortgage statement or monthly coupon book. --
2. Contact Fannie Mae. Call 1-800-7FANNIE (8 a.m. - 8 p.m. ET) or visit http://www.fanniemae.com/homeaffordable.

Fannie Mae also intends to make an online tool available later this month so borrowers can look up their loan and determine if it is owned by the company.