Affordable housing has long been the dream of American families and policymakers alike. Now both are seeing their wish fulfilled, though not in the way either envisioned: the housing correction. This drop in home prices will be remembered as a blessing for first-time homebuyers, but this comes as no comfort to those who are already locked in to a mortgage and struggling to make payments.

If you are having difficulty paying your mortgage, you may be eligible for relief through the new federal Making Home Affordable (MHA) program. This service can aid qualified homeowners by either helping them refinance to a new loan or by modifying their existing loan.

To qualify for MHA refinancing, you must:

Have a loan that is owned or guaranteed by Fannie Mae or Freddie Mac. You may look up your loan here to see if it qualifies.

Be current on your mortgage payments. Any single payment more than 30 days late disqualifies you.

Have a mortgage balance that does not exceed 105% of your home’s current value. Divide your mortgage balance by your home’s value, and then multiply by 100 to find your percentage ratio.

To qualify for MHA loan modification, you must:

Use the home as your primary residence

Owe no more than $729,750 on your first mortgage

Have trouble paying your mortgage. Examples include having had a significant increase in your mortgage payment OR reduction in your income since you got your current loan OR having suffered a hardship that has increased your expenses (like medical bills).

Have obtained your mortgage before January 1, 2009

Have payments on your first mortgage (including principal, interest, taxes, insurance and homeowner’s association dues, if applicable) that are more than 31% of your current gross income. You can calculate the cutoff point here.

If you think you qualify for either program based on the above information and are interested in proceeding, visit the MHA website and then contact your loan officer.

The MHA program ends on June 10, 2010.

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