The Homeowner Affordability and Stability Plan established two programs in 2009 designed to help homeowners with mortgages held by Fannie Mae avoid foreclosure. Depending on your personal circumstances, you might be able to take advantage of either the Homeowner Affordabile Refinance plan or the Homeowner Affordable Modification plan

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• Homeowners who are experiencing financial hardship due to rising rates on adjustable mortgages, declining property values, or adverse life circumstances have two options for lowering their monthly mortgage payments if their mortgage is held by Fannie Mae. They may be able to receive assistance under either the Home Affordable Refinance plan or the Home Affordable Modification plan.

(Creative Commons photo by Dwonderwall)

• The Home Affordable Refinance plan is designed for people who are current on their mortgage payments, but wouldn't be eligible to refinance at current interest rates because their current mortgage balance exceeds the value of their house. The Home Affordable Modification plan includes incentives for lenders to modify mortgage interest rates and lengths, and in some cases forgive principal so that people who are experiencing financial hardship can stay in their homes.

• If you are applying for refinancing, you'll need to provide documentation that divulges income and any other outstanding debts. For a modification, you'll also be asked for supporting documents for the hardship you're claiming, a letter describing the hardship, and a detailed description of your financial circumstances. The increased level of detail requested allows the lender to determine if there are any changes you can make in your spending, other than a modification, that would enable you to make your mortgage payments.

• After determining which program best matches your circumstances, and after gathering your information, you should call the bank that services your mortgage. Tell them you would like to apply for refinancing under the Home Affordable Refinance plan, or that you would like to request modification of terms under the Home Affordable Modification plan.

• As a homeowner whose loan is held by Fannie Mae, you have two options for mortgage relief. Under either scenario, it is important to act as early as possible. Review the eligibility criteria for each plan, and determine which you qualify for. Be prepared with your financial information before you contact the bank and specifically indicate that you are applying for a Home Affordable plan.

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