Borrowers

The Obama administration's new plan to stimulate refinancings of FHA mortgages is likely to help large numbers of homeowners — even those who are deeply underwater — cut their monthly costs by switching to a loan with a rate below 4%. Here's a quick overview of the "streamline refi" program and what it will take for you to qualify. First, the baseline criteria: Your current home loan must be FHA-insured and must have been put on the Federal Housing Administration's books no later than May 31, 2009.

It's not quite a check in the mail, but certain distressed mortgage borrowers at Bank of America Corp. will be happy they opened the letter anyhow. The Charlotte, N.C., lender said Tuesday it has begun contacting about 200,000 customers who have fallen behind on home loans and owe more than their current home values. It is notifying them that they may qualify to have their loan balances reduced as much as $100,000 as part of a $25-billion, 49-state settlement over foreclosure abuses.

Distancing himself from Republicans on housing issues, President Obama pitched a $5-billion to $10-billion plan to help a key segment of struggling homeowners — those still making monthly payments, but on underwater mortgages. Obama proposed Wednesday to help about 3.5 million people with good credit who are unable to refinance at historically low rates because their homes are worth less than their mortgages. He argued that those homeowners — and the country — couldn't afford to let the housing market bottom out, as many Republicans, including presidential candidate Mitt Romney, have advocated.

A newly streamlined government plan to reward homeowners who diligently pay their underwater mortgages is proving a bonanza for banks, which by one estimate may pocket $12 billion in extra revenue by refinancing loans. The revisions to the Obama administration's 3-year-old Home Affordable Refinance Program have yielded mixed results for homeowners, analysts and mortgage professionals say. Some responsible homeowners are indeed getting lower-interest loans despite owing far more than their homes are worth.

The most ambitious federal mortgage program to date aimed at millions of underwater homeowners is poised to take off in the coming two weeks, yet some key issues could hinder borrower participation. One of them involves something most owners know nothing about: Who was your mortgage insurer on your underwater loan? Though it was announced by the Obama administration late last year, "HARP 2.0" — the second version of the Home Affordable Refinance Program — will finally hit full stride around the middle of this month, when Fannie Mae and Freddie Mac finish tweaking their automated underwriting systems to accept applications, and lenders and mortgage insurance companies start handling large volumes of requests.

More than 100,000 struggling homeowners could get help from a $2-billion program that California is launching, including about 25,000 borrowers who owe more than their properties are worth and could see their mortgages shrink. The Keep Your Home California program, which uses federal funds reserved for the 2008 rescue of the financial system, has the potential to make a sizable dent in California's foreclosure crisis and help the general housing market. State officials hope to fend off foreclosure for about 95,000 borrowers and provide moving assistance to about 6,500 people who do lose their homes.

If you give millions of seriously underwater homeowners a new equity position in their properties by reducing their principal mortgage debt, will they keep paying on their loans and avoid foreclosure? Call it a pipe dream or a significant model for other lenders and investors, but one company says it has found an important combination: Modify underwater borrowers' loans so that their payments are reduced to a manageable amount and cut their principal debt over time, but make the deal dependent on their scrupulous on-time monthly payments of the new amount plus sharing of a portion of any future profit they make on the house sale.

As many as 9,000 struggling homeowners in California could see their mortgages slashed under changes to a program aimed at people who owe more on their loans than their homes are worth. By dropping a requirement that banks match taxpayer funds, state officials are hoping to make it easier for homeowners to reduce their mortgages through the Keep Your Home California program. Rolled out last year, the initiative uses federal funds reserved for the 2008 Wall Street bailout to aid borrowers at risk of foreclosure.

Payday loans are billed as a quick way for borrowers to receive small loans, with no collateral or credit requirements. But the cost of the loans, which proponents say are supposed to be for emergency use, is extremely high. In California, each $100 borrowed costs up to $15; thus the fee on the maximum allowed $300 payday loan would amount to as much as $45. The annual percentage rate on that deal comes out to a whopping 460%. But do these borrowers, who might turn to payday loans to get money for recurring expenses, such as for groceries or housing, have better options?

Amid increasing government pressure to stem foreclosures, Bank of America Corp. said Wednesday that it would offer to erase as much as $3 billion in principal owed by thousands of severely delinquent borrowers who owe more than their homes are worth. The bank's plan is by far the most ambitious and systematic effort by a major lender to help homeowners avoid foreclosures while continuing to make loan payments. Unlike previous initiatives, this one will be geared toward borrowers who are so far underwater that they are unlikely to be helped by a government housing relief plan.

This is a story of persistence. In the case of Miriam Ramirez, it's the story of trying to obtain a much-needed loan modification from Bank of America. In BofA's case, it's the story of giving a mortgage customer the runaround for two years . Loan modifications have been an increasingly nettlesome issue as millions of homeowners struggle to make mortgage payments during the economic slump. The Obama administration has called upon banks to be more diligent in assisting customers prior to foreclosing on properties.

Anyone who has ever fought with a lender over a lost or misapplied house payment should be heartened by the latest news from the new federal mortgage industry watchdog. The Consumer Financial Protection Bureau plans to propose a straightforward approach to loan administration that should benefit consumers and servicers, which are the firms that loan owners hire to collect payments, disburse taxes and insurance, and chase after delinquent borrowers. The fledgling bureau, which is not yet a year old, will propose the new rules this summer and expects to put them in place in January.

As many as 9,000 struggling homeowners in California could see their mortgages slashed under changes to a program aimed at people who owe more on their loans than their homes are worth. By dropping a requirement that banks match taxpayer funds, state officials are hoping to make it easier for homeowners to reduce their mortgages through the Keep Your Home California program. Rolled out last year, the initiative uses federal funds reserved for the 2008 Wall Street bailout to aid borrowers at risk of foreclosure.

The housing market's boom and bust exposed stunning flaws in the housing finance system, from lax underwriting to sloppy record-keeping to incompetent loan servicing. California Atty. Gen. Kamala Harris is pushing lawmakers to incorporate some of the lessons learned into a new state law governing foreclosures, but lenders are resisting, arguing that the mortgage meltdown was just a "temporary" crisis that doesn't justify a permanent change in law. That's wishful thinking, and legislators should give troubled borrowers more protection against lenders' procedural shortcuts.

It's been five years since the housing bubble burst, yet hundreds of thousands of California homeowners remain in default and en route to foreclosure. Some of these troubled borrowers will benefit from new consumer protections included in a nationwide settlement that five major banks agreed to in February, including a requirement that foreclosure proceedings wait until the bank considers a modified mortgage that would be less costly to borrower and lender alike. Those protections, however, extend no further than the five banks and the loans they service.

Dear Liz: Is there any way to expedite the foreclosure process? My wife bought a townhome shortly before we were married. Long story short, it didn't fit our family once we got married and had a baby. We bought a larger house and tried renting the townhome but couldn't cover the mortgage payment. We attempted a short sale, but the bank refused a good offer, so we let it go into default. We even offered to do a deed in lieu of foreclosure, but the bank refused unless we provided financial information for me, too. Since I'm not named on the mortgage and wasn't even around when she got the loan, I refused.

Aggrieved homeowners ensnared by a foreclosure system riddled with misconduct and error are set to get their first shot at winning some cash back from the banks. Under orders from federal regulators, 14 mortgage servicers on Tuesday began mailing out 4.3 million letters to potential victims of wrongful foreclosure practices. The letters will invite borrowers to submit their cases for a free review by independent consultants that are funded by the lenders but vetted by regulators.

Tasha Younger has been one of the hidden statistics in the growing number of graduates and former students overburdened with education loans. The 38-year-old mother of two — still trying to pay off her loans a decade after quitting nursing school — has been delinquent on her monthly payments but never in default. Statistics typically show how many students simply fail to make payments. But a recent survey has found that for every person who defaults on student loans, at least two more are like Younger: late or short on payments.

WASHINGTON — A little-noticed mortgage rule change that took effect April 1 could create hassles for significant numbers of home buyers who plan to use low-down-payment FHA financing this spring. The change affects anyone with one or more "collection" accounts buried away in national credit bureau files. These include medical, student loan, retail and other debts reported as unpaid — correctly or incorrectly — by creditors and subsequently sent to collection agencies. In a reversal of its previous policy, the Federal Housing Administration says it will no longer approve applications when the borrowers have outstanding collections or disputed accounts with an aggregate of $1,000 or more of unpaid bills.

NEW YORK Struggling to pay employee pensions, local governments are increasingly borrowing money to cover their obligations - exploiting a loophole in federal law that allows them to issue taxable bonds without seeking voter approval. Oakland took a bet on its pension fund that ended up costing the city an estimated $245 million - nearly a quarter of its annual budget. That hasn't stopped the city from looking to try its luck one more time. The bets are being made using an exotic but increasingly popular financial instrument known as a pension obligation bond.