1. ��

   In 2006: Family A took a 30-year fixed rate mortgage of $207,000 on a house worth $260,000 at the time. (The family put just over 20% down.) They received a Fannie Mae conforming loan with an interest rate of 6.50%.

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   Today: Family A has about $200,000 remaining on their mortgage but their home value has fallen 15 percent to $221,000.

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   Their "loan-to-value" ratio is now 90%, making them ineligible for a Fannie Mae refinancing.

2. ��

Under the Refinancing Plan: Family A can refinance to a rate of 5.16%. This would reduce their annual payments by nearly $2,350.

Existing Mortgage		Refinancing
Balance	$199,584		$203,575
Remaining Years	27		30
Interest Rate	6.50%		5.16%
Monthly Payment	$1,308		$1,113
Savings	$196 per month, $2,347 per year

1. ��

   In 2006: Family B took a 30-year fixed rate mortgage of $350,000 on a house worth $475,000 at the time. (The family put just over 26% down.) They received a Fannie Mae conforming loan with an interest rate of 6.50%.

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   Today: Family B has about $337,460 remaining on their mortgage but their home value has fallen to $400,000.

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   Their "loan-to-value" ratio is now 84%, making them ineligible for a Fannie Mae refinancing.

2. ��

Under the Refinancing Plan: Family B can refinance to a rate of 5.16%. This would reduce their annual payments by nearly $4,000.

Existing Mortgage		Refinancing
Balance	$337,460		$344,210
Remaining Years	27		30
Interest Rate	6.50%		5.16%
Monthly Payment	$2,212		$1,882
Savings	$331 per month, $3,968 per year

1. ��

   In 2006: Family C took out a 30-year subprime mortgage of $220,000, on a house worth $230,000 at the time (they put less than 5% down). Their mortgage broker – Mom & Pop Mortgage – sold their loan to Investment Bank. The interest rate on their mortgage is 7.5%.

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   Today: Family C has $214,016 remaining on their mortgage but their home value has fallen -18% to $189,000. Also, in November, one parent in Family C was moved from full-time to part-time work, causing a significant negative shock to their income.

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   Their loan is now 113% the value of their home, making them "underwater" and unable to sell their house.

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   Meanwhile, their monthly mortgage payment is $1,538 and their monthly income has fallen to $3,650, meaning the ratio of their monthly mortgage debt to income is 42%.

2. ��

Under the Homeowner Stability Initiative: Family C can get a government sponsored modification that – for five years – will reduce their mortgage payment by $406 a month. After those five years, Family C’s mortgage payment will adjust upward at a moderate, phased-in level.

Existing Mortgage		Loan Modification
Balance	$213,431		$213,431
Remaining Years	27		27
Interest Rate	7.50%		4.42%
Monthly Payment	$1,538		$1,132
Savings:	$406 per month, $4,870 per year