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Questions and answers on foreclosure prevention

The Obama administration on Friday announced a major reworking of its troubled $75 billion plan to prevent foreclosures. The revamped program is now designed to aid jobless homeowners and people who owe more on their mortgages than their homes are worth.

Q. How many homeowners will this help?

A. The effort is designed to enable the government to reach its original goal of helping 3 million to 4 million homeowners avoid foreclosure by the end of 2012. Only 170,000 homeowners have completed loan modifications, out of 1.1 million who began the government's Home Affordable Modification Program since it started last year.

Q. When will all these programs be available?

A. Government officials didn't specify but said they should become available in the coming months.

Q. How do I qualify?

A: You must have a mortgage of less than $729,750. You also must show that you are in financial trouble. And you have to be spending at least 31 percent of your pretax income on your mortgage payment.

Q: I have a second mortgage. Will that complicate my chances of refinancing into an FHA loan under this program?

A: The FHA will allow the refinancing of the first mortgage only. If there is a second mortgage, the two loans combined cannot exceed the current value of the home by more than 15 percent once the first loan is refinanced.

Q: Will refinancing into an FHA loan this way hurt my credit score?

A: Probably. It is likely to hurt your credit score because the total balance of the loan was not paid off.

Q: I have already been given a modification under the government program. Is it too late for me to get a principal reduction?

A: No. If you are still current on payments when this new program kicks in, lenders will be required to retroactively consider reducing the mortgage balance by the same amount that would have been forgiven under the new approach.

Q: How can I learn more?

A: More details are available at http://makinghomeaffordable.gov/modification_eligibility.html. The site includes a questionnaire to help homeowners determine eligibility.

- AP, Washington Post

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