Making Home Affordable

• The Making Home Affordable program aims to decrease foreclosures and help stabilize home values across the country. This program directs Fannie Mae and Freddie Mac to empower their loan servicers to offer help to struggling homeowners. To qualify, your loan must be owned by either Freddie Mac or Fannie Mae (see Resources). You can also call your servicer, the company you send your mortgage payment to, and ask who owns your loan. Part of this program specifically targets homeowners with interest-only loans.
  
  

Housing Counseling

• The U.S. Department of Housing and Urban Development (HUD) provides grants, training and certification to nonprofit housing counseling agencies. These agencies assist homeowners and home buyers throughout the housing process. If you have fallen behind on your interest-only loan and are facing foreclosure, or if you fear you will be facing foreclosure, contact a HUD approved housing counselor in your area (see Resources). The foreclosure avoidance counseling is free.
  
  

Refinance

• If you have not missed any payments, or have not paid your payment 30 days or more late, you may qualify for a Home Affordable Refinance. This refinance is available either through your current servicer, or through a different mortgage company. Your new mortgage balance may be up to 125 percent of your home's current value. You may include closing costs into the new loan and receive up to $250 back at closing. Your new loan must be a more conservative loan program. If you currently have an interest-only ARM, your new loan will not be interest-only and likely will be a fixed-rate mortgage. This stabilizes your payment and ensures some of your payment is applied to the loan balance, increasing your equity in the home.
  
  

Permanent Modification

• If you have paid your mortgage payment more than 30 days late in the past 12 months, you may qualify for a permanent loan modification. This program is only for people who are having issues making their mortgage payments. You must enter housing counseling through a HUD-approved counseling agency before applying for this program. Your servicer requires you provide proof of your income and authorization to pull your taxes from the IRS. If you qualify your loan's terms, the interest rate, balance or combination of the three may be changed permanently. Your servicer may lower your loan's interest rate, change the loan from an interest-only to fully amortizing and lower your loan's outstanding balance.