OBAMA's housing plan aims to help 9 million

Program will bypass those with loans severely "underwater".

The Obama administration's housing plan is intended to help 9 mil. struggling homeowners avoid foreclosure, but it leaves out tens of thousands of borrowers in the most battered housing markets who won't qualify because their homes have lost too much value.

The program is limited to borrowers who owe up to 5 percent more than their home's current value.

The program has two parts: one to work with lenders to modify the loan terms for up to 4 million homeowners, the second to refinance up to 5 million homeowners into more affordable fixed-rate loans.

For the modification program, which runs through 2012, borrowers who are eligible will have to provide their most recent tax return and two pay stubs, as well as an "affidavit of financial hardship" to qualify. In the affidavit, applicants will have to cite the reasons behind their financial woes, such as job loss or a drop in income. The government will then take steps to verify the information.

Borrowers are only allowed to have their loans modified once, and the program applies for loans made on Jan. 1, 2009 or earlier.

Mortgages for single-family properties that are worth more than $729,750 are excluded.

Lenders could reduce a borrower's interest rate to as low as 2 percent for five years. Rates would then rise to about 5 percent until the mortgage is repaid.

(Daily News, Mar. 5., 2009)