Help for Homeowners with a Conventional Mortgage That Is

By Laura Agadoni, eHow Contributor

A mortgage meltdown occurred in 2008 the likes of which the United States has not seen since the Great Depression. Millions of people, as of 2011, have lost their homes to foreclosure. Being upside down on a house, meaning that you owe more on the house than it's worth, can be a precursor to foreclosure. The government knows this and instituted programs to help homeowners in this situation, because if nothing is done, the entire U.S. financial system is jeopardized.

1. • The government's Making Home Affordable plan aims to keep homeowners who are in mortgage trouble in their homes through refinancing or modifying the loan. Homeowners upside down on their loans can determine whether they qualify for the Home Affordable Refinance Program, also called HARP. If your mortgage is through Fannie Mae or Freddie Mac, you are current on your mortgage payments and have enough income to handle a refinanced mortgage, you might qualify for this program that can make your mortgage payments affordable. You may qualify for HARP if you have a first mortgage balance that is no more than 25 percent higher than the value of the home.

   • Another option is the Home Affordable Modification Program, also called HAMP, which allows you to modify your current loan to one that is affordable. As of 2010, 1.76 million homeowners received a loan modification through this program. About 80 percent of these modifications reduced both the principal and the interest on the mortgage, according to the National Mortgage Professional Magazine. It's certainly worth your while to try to get a loan modification, but many people get the runaround from their lender. Hearing negative loan modification stories prompted syndicated financial columnist and radio personality Ilyce Glink to have readers post on her column whether they are in "loan modification hell," because they never receive an answer or even get to speak to anyone regarding the status of their modification request.

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• Before you throw in the towel and succumb to foreclosure, ask your lender whether you can do a short sale. If you are approved, you can try to sell the home for less than you owe on it. If your house doesn't sell, you may be able to do a deed-in-lieu of foreclosure, which allows you to transfer your property to the lender, and you walk away free and clear of any mortgages and liens.

• To qualify for relief programs, homeowners must prove to be responsible homeowners, prove that they are undergoing a hardship and must verify that they have an income source. Richard Moody, chief economist at Mission Residential, points out in "U.S. News & World Report" that had there been tougher standards such as these when granting mortgages in the first place, homeowners probably would not be experiencing the problems they face post 2008.