President Obama's new Making Home Affordable (MHA) was created to help homeowners during this recent economic crisis. This new plan has resulted in a lot of interest and many questions. Here are some of the most common and there answers.

How Did This Get Started?

The Obama administration felt that it was very important to work out a plan that would help Americans continue to pay their mortgages. This plan, which is part of the MHA plan, began in March 2009. Until 2012, qualifying homeowners can renegotiate their mortgage so it is once again affordable according to their own financial situation.

Who Qualifies for this Loan?

People who live in the home on which they are paying the loan are eligible for this program. Mortgages on second homes, investment properties or vacation homes are not eligible for modification. The loan must have been negotiated before 2009 and must not exceed $729,750. Gross monthly income will be verified before the modification is approved.

What is the Procedure?

The bank will calculate the percentage of your monthly income that is being used to pay your mortgage. Under the MHA, borrowers can lower their payments to less than 31% of their income. After this new mortgage payment amount is calculated, it will be in effect for five years.

How is the Plan Funded?

Under the MHA there are two initiatives and each has a different purpose and funding. The part that enables loan modifications is the Homeowner Stability Initiative (HSI) and $75 billion of taxpayers' dollars has been designated in this way. It is hoped that HSI will help 3-4 million homeowners by 2012.

What are the Restrictions on the MHA Plan?

Investors may not apply for a loan modification. In order to be approved, a credit check will be done to make sure the applicant is living in the house. Fannie Mae or Freddie Mac must insure the loan. You can find out if your loan is eligible in this area by calling your lender's toll-free number.

How Do I Get a Loan Modification?

Begin the process by making an appointment with an HUD-approved financial counselor. There are many free services that will help you get a handle on your finances and start the modification process.

In order to learn about the Making Home Affordable (MHA) plan that offers help to eligible homeowners, through loan modifications, read these frequently asked questions in this article.