The mortgage assistance plans offered by these companies are very important because Fannie Mae and Freddie Mac guarantee or own over 30 million U.S. mortgages, which is over 60 percent of all single-family home loans. The number of mortgages they support and own also continues to grow on a daily basis. The two lenders truly dominate the mortgage industry and are key to keeping the marketplace operating effectively.

By many estimates, the new government plan could help over 600,000 families that are currently delinquent on their mortgages. It can assist a borrower that will soon fall behind on payments or it can help those facing the mortgage foreclosure process.

To qualify for help for one of the plans, mortgage borrowers would need to be at least three months behind on their home payments, and they would need to owe 90 percent or more than the home is currently worth. Investors who do not live in their homes would not be eligible for financial aid as would borrowers who have filed for bankruptcy.

Borrowers could receive help in several ways. They include:

1) The interest rate on their current mortgage would be reduced so that borrowers would not need to pay more than 38 percent of their gross monthly income on housing expenses or towards mortgage debt.

2) Another option is for the mortgage loans to be extended from 30 years to 40 years. This will in effect reduce payments and it will also allow for some of the principal due to be deferred interest-free.

3) If the borrower has no other option but to foreclose, Fannie and Freddie may rent the home back to the borrower. More on Freddie Mac rentals for mortgage borrowers.

4) Fannie Mae and Freddie Mac can also determine if a borrower can qualify for a forbearance on their home loan, which is a temporary suspension or reduction in their monthly payments. Read more on unemployment forbearance from Fannie and Freddie.

Sign up for help

To be considered for assistance from the different programs offered by these lenders, a borrower should contact his or her mortgage servicer and provide the requested information, including income information. Loan servicers also will have flexibility in the mix of tools they can offer to help a borrower, but the goal of the program is to create a more affordable payment.

The main program was effective as of the end of last year, so it is up and running. Mortgage counselors should also be able to provide more information on this program.

These two government owned and supported entities offer a number of other programs and resources for homeowners. They range from loan modifications, principal reduction, forbearance and more. Anytime you are struggling with your payments talk to your bank or lender to determine if Fannie or Freddie own or service your loan. If they do, then be sure to explore these government programs. Mostly due to the fact that these lenders are in fact owned by the federal government, struggling homeowners are usually presented with multiple options when they need assistance.

Fannie Mae can also be contacted at 1-800-732-664. This is their main consumer hotline phone number. It will allow homeowners to learn about these and other options that may be available to them.

By Jon McNamara

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