Foreclosure help for homeowners?

How are loans modified to prevent foreclosures?

Foreclosure prevention is centered on two programs, both of which have "hope" in their name.

A new federal loan workout program called Hope for Homeowners begins this month, targeting those unable to pay their mortgages. It is for homeowners who bought their homes before 2008 and now have monthly payments exceeding 31% of their income.

Under the program, banks would in many cases write down mortgages to 90% of a home's current value. Such a provision would be important in California, where many recent home buyers have mortgages that now greatly exceed their property values.

The new 30-year fixed-rate loan would be insured by the Federal Housing Administration and could not exceed $550,440.

An existing voluntary effort to prevent foreclosures has been in place since last year. Called Hope Now, the program is a joint effort by lenders, mortgage servicers and nonprofit housing groups to help troubled homeowners renegotiate their mortgages. Through this program, borrowers have been able to defer or reschedule monthly payments or reduce their loan principal.

How will I know whether the government owns my loan?

This has yet to be determined. The Treasury secretary will have 45 days to implement a plan, and presumably these details will become available at that time.

Tom Deutsch, deputy executive director of the American Securitization Forum, a financial industry group, said that in many cases the loan servicer won't change even if the government has taken over a mortgage. You can ask your loan servicer who owns your mortgage, but if the government was one of many investors in a mortgage-backed security into which your loan is packaged, you might not be able to tell.

Deutsch said the government might also set up a method for borrowers to inquire about who holds their loans.

So what should I do if I want assistance?

Consumer advocates say you should first contact your lender to see whether you can adjust the terms to make the payments more affordable.

You also can call the Hope Now hotline at (888) 995-HOPE.

Information on the new federal loan restructuring program is available at www.hud.gov.

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peter.hong@latimes.com