If your income slumped along with the economy, you've got plenty of company these days. So much so that the government has a program meant to help you out by cutting your mortgage payments to 31 percent of your gross income. But it turns out that qualifying for this benefit will probably take some fancy footwork, a sympathetic partner and a little luck. Here are some pointers for navigating the terrain.
Get to know the program
The program in question is the Obama administration's $75 billion Making Home Affordable program.
It applies to mortgages held by Fannie Mae and Freddie Mac, the two giant mortgage holders that the government took control of a year ago. Under the government's auspices, Fannie and Freddie are now cutting interest rates on mortgages they own to as little as 2 percent, with the aim of lowing payments to no more than 31 percent of a homeowner's gross income.
How do you know if Fannie or Freddie own your mortgage? The simplest way is to visit each of the lender's Web sites and type in the information requested about you and your residence. Remember: The giant home financing organizations buy loans that were originated by commercial banks and own a significant portion the nation's entire home loan assets. That means you may have taken out your mortgage through Bank of America, Wells Fargo or another private lender, and they may still be servicing your account, while ownership has actually been transferred to Fannie or Freddie (if not, you're out of luck).
If you do have a Fannie or Freddie loan, then figure out what portion of your gross monthly income your housing payment consumes. In this case, your "housing payment" means not only your mortgage costs but your PITI (principal, interest, taxes and insurance). Since you first took out your mortgage, it may have zoomed way up as a percentage of your household income, either because you and your spouse's income has fallen or because the adjustable rate of interest on the loan has ratcheted up. In either case, you should consider applying.