I have spent quite a bit of time this week calling big mortgage lenders to chat about their streamline loan modification program.

Here’s what I learned:

If you have a Fannie Mae or Freddie Mac loan, AND you are 90 days + late on your mortgage, you can call your lender and request a streamline loan modification. That should trigger a 60-minute call in which the loan servicer talks to you about your loan modification options. THERE IS NO COST FOR THIS. In fact, Freddie and Fannie will compensate your loan servicer for assisting you.

The loan servicer will attempt to figure out if you can afford your loan if the interest rate is adjusted, or the term extended. They will verify if you have enough income to spend no more than 38 percent of your gross monthly income on your mortgage, taxes and insurance.

If you don’t qualify, then you’ll need something called a full loan modification. This is a more extensive interview process where the servicer will attempt to figure out if there is any way to save your house. Again, THERE IS NO COST FOR THIS.

If you are having trouble getting your lender on the phone, call the HOPE NOW hotline: 888-995-HOPE. The person who answers the phone will connect you in a three-way call with your lender to get the ball rolling. (Some of the folks who answer the phone at the HOPE NOW hotline are housing counselors from CCCS of Greater Atlanta.)

Unfortunately, Fannie Mae and Freddie Mac only have direct control over about 25 percent of loans out there. FHA has a big chunk, but about 60 percent of loans are held by investors who are all over the place. And, that’s a big problem.

None of this applies to anyone who has good credit and is on time with their payments. I’ll post about that next.

Jan. 18, 2009