Homeowners

Refinancing today is not the same game it was a few years ago, when homeowners with even a modest amount of equity and just so-so credit could score a great loan. You now need good credit, lots of equity and very little outside debt. "These are very traditional lending standards, but they're going to come as a shock to anybody who has only been in the market for the past 10 years," said Keith Gumbinger, vice president of HSH Associates, a Pompton Plains, N.J., publisher of loan information.

The housing plan unveiled by President Obama on Wednesday goes further than any previous effort to break the vicious cycle of declining home values, rising mortgage defaults and frozen credit that triggered the country's worst recession since the 1930s. And it embraces strategies that attack the complex problems on several fronts but without requiring a long struggle in Congress.

More Californians are failing to make their mortgage payments than at any time in the last 20 years, but fewer of them are losing their homes, according to new figures. The drop in foreclosures follows moratoriums adopted by major banks and mortgage giants Fannie Mae and Freddie Mac. The increase in loan defaults, meanwhile, suggests that rising unemployment and the continuing recession are still claiming fresh victims.

So you want to refinance your house, but it's not worth enough for you to get a good loan in the current market? A new Obama administration program is designed to fix that problem for millions of homeowners. Here's how it works. In the past, the federal Fannie Mae and Freddie Mac mortgage programs would only handle loans of up to 80% of your home's value, unless you bought mortgage insurance. And if you owed more than your home was worth, you were flat out of luck.

Miss a mortgage payment, and the foreclosure clock starts ticking. In as little as five months, the sheriff could be at the door, ordering you to leave the house that is no longer your home. But free help is available, including professional legal advice, and a host of ways to stop the clock. Or it might make sense to simply run the clock out, staying in the house at no cost until you're kicked out. The only inherently bad choices when faced with a foreclosure are delay and denial.

More than 236,000 homes were lost to foreclosure in California last year, topping the previous nine years combined, data released Tuesday show. And the number of borrowers who defaulted on their payments hit a record high of more than 404,000. The wave of foreclosures, which began in early 2007, was initially triggered by falling home values and resets on adjustable-rate loans.

The Obama administration, stepping up efforts to stem foreclosures, will offer lenders and homeowners incentives to cut payments on second mortgages, write down balances on first mortgages that are underwater, and repay loans in a timely fashion. The new measures announced Tuesday would especially help many distressed homeowners who have both first and second mortgages -- and can't afford either.

Modifying nontraditional mortgages will succeed for many people, but most such modifications will end up in default within a year, a major ratings company predicts. The Fitch Ratings study examined subprime mortgages, jumbo loans and little-documented home loans that Wall Street bundled up to back mortgage bonds from 2005 through 2007.

If you're at retirement age and worried about how you'll pay the bills after the bear market devoured a chunk of your nest egg, you may be sitting on the solution: your home. With a loan called a reverse mortgage, homeowners who are at least 62 years old can tap the equity in their homes to provide monthly income for life.

You know you're in a tight spot when Bankruptcy Court begins to look like the least bad solution to a pressing economic problem. But the housing foreclosure situation is pretty ugly, so there we are. Unfortunately, U.S. Bankruptcy Court isn't allowed to be part of the solution to rising foreclosures, thanks largely to the mortgage banking lobby. It's worth asking: Why not? Consider the scale of the problem.