Obama's Housing Plan: Will It Help You?

The White House announced on Wednesday the specifics and eligibility requirements for its massive mortgage relief program, aimed at helping homeowners either modify or refinance their mortgages as needed.

Are you one of the millions of Americans who can take advantage of the program?

If you’re a responsible homeowner looking to lock in a lower interest rate – responsible meaning you make your payments on time and are no more than five percent underwater – you may now have the opportunity to do so under the guidelines of the new plan. Note that the home must be your primary residence and the mortgage must be backed or guaranteed by Fannie Mae or Freddie Mac. Ask your lender if you are unsure who guarantees your mortgage.

If you’re struggling to keep your home out of foreclosure, there’s help for you, too. As long as you can prove financial hardship (such as the loss of a job), you may be eligible for loan modification that can cut your monthly payments to as little as 31% of your monthly income. The mortgage must be equal to or less than $729,750, it must be your primary residence and the mortgage must have originated before the first of this year.

Former HUD Secretary Steve Preston has hope for the program, telling On The Money that the plan should help people who pay on time but do not have the equity to refinance without a little assistance. In the past, when interest rates have gone down, a wave of people looking to refinance has generally followed. But now, too many people are unable to refinance. This little boost could prove the stimulus they need, Preston says.

As Carmen wrote right here last monthwhen the plan was announced, the ball is now in the lenders’ court. The success of the program will largely be defined by how many lenders and servicers participate. They have a responsibility to reach out to their borrowers who need help.

If you believe you stand to benefit from Obama’s housing plan, go to financialstability.gov to get a comprehensive list of the paperwork you need to bring to your lender.