Bush Administration unveils mortgage modification plan

Bush Administration unveils mortgage modification plan and show its effort focuses on Fannie, Freddie - sets standards for private sector to stop the ever increasing crisis of home foreclosures. But, it has no direct financial help from U.S. government.

"The Bush administration on Tuesday unveiled a new program to modify mortgages and stabilize the battered real estate market, but the plan stops short of providing direct government financial help to at-risk homeowners.

The plan centers on Fannie Mae and Freddie Mac, which between them own or back about 31 million mortgages worth a combined $5 trillion. The federal government took over the firms in September due to mounting losses on their portfolios of mortgages. ", based on CNNMoney.com report.

Who Is Eligible?

1. Homeowners who are 90 days or more late in their mortgage payments and live in the home on which the mortgage was taken.

2. The loan is owned by Fannie or Freddie and borroer has not filed for bankruptcy since the laon were taken.

What the Program Will Do for You?

If you are eligible for this program, your mortgage payments would be adjusted through lower interest rates or longer repayment schedules with the goal of bringing payments below 38% of monthly your household income.

However, even in cases where declining home prices have taken the value of a home to less than is owed on the mortgage, the balance of the your loan will not be lowered under this program. It is not a loan forgiveness program. Your loans will be paid but at terms affordable for you.
What is the Major Difference between This Program and Other Loan Modification Programs of Many Banks?

This is also a voluntary plan just as other plans of a number of major banks, including Citigroup,  JPMorgan Chase, and Bank of America. Those banks have announced loan modifications programs in recent weeks. However,  they hold only a fraction of those owned or guaranteed by Fannie Mae and Freddie Mac. Most of those mortgage modification programs announced by those banks so far try to cap the payments of homeowners at risk of losing their homes at a level they can afford, typically about 34% to 40% of their incomes, through lower interest rates, longer repayment schedules or reductions in loan balances. The major difference of the new Bush plan from the loan modification programs by banks is that it does not include the option of reducing the balance of the loan.

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