Under the Making Homes Affordable Program the federal government has a program in which they are working with lenders to provide refinancing alternatives to homeowners needing to refinance loans that are on properties were the value of the home has fallen below the amount owed on the loan. 

The following conditions must be met for a borrower to qualify for this program:

1. Propety is owner/occupied with one to four units.

2. Loan can be fannie Mae or Freddie Mac or others if loan owner agrees.

3. The borrower must be current on the loan being refinanced or not more than 30 days late.

4. The existing loan does not exceed 125% fo the market value of the property.

5. The borrower must have reasonable ability to pay the new loan (must qualify).

6. It must be demonstrated that refinancing the loan will improve the long-term affordability of the

    loan for the borrower.

7. The program will expire on December 31, 2012

This program has not been of help to many due to the fact that their property value has dropped sometimes 40 to 50% and even the 125% of market value is not enough to allow existing loan(s) to be repaid.  2nd trust deed loans can remain on the property if they will agree to allow a new first loan to replace the existing loan, or if enough money is available over an above the first loan, the 2nd can be paid off or possibly reduced if permitted by the lender.

This program has changed since it was originally instituted.  It may be amended again to make it available to more people in need.  See www.MakingHomeAffordable.gov for more information on this program and any possible recent changes.