It’s the new focus of attention among homeowners struggling to keep up with falling rates, rising mortgages and homes that are underwater – while the complete details about the $75 million bailout sanctioned by the Obama government are not available as of now, there seems to be a mixture of hope tinged with doubt in the air. The question that most people are asking is – will the bailout help me?

The answer depends on a variety of factors –

• It will be to your advantage if you’ve been up to date in your payments so far.
• You do qualify if your loan was sanctioned by Fannie Mae and Freddie Mac.
• You could get your monthly payments reduced to 31 percent of your household income.
• You qualify for a refinance at a low interest rate for up to 105 percent of your home’s present value.
• You are eligible for help under the bailout plan only if you are the homeowner and if the home in question is your primary residence. You do not qualify if you bought the home for investment or resale purposes.
• You do not qualify if the home is a vacation residence.
• The new low interest rates are fixed only for the first five years, after which they will gradually be raised to the current levels.
• You could get your principal decreased if you are up to date in your monthly payments for the first five years while the interest is low.
• There are no prepayment penalties, so you could pay more than the minimum amount each month and get through your mortgage in a shorter period of time, thus reducing the total amount you’re supposed to pay. The more you pay each month, the less you owe on interest on the remaining principal amount.
• You do not qualify if you took out the initial mortgage knowing that you could not hope to make the subsequent payments. This is a tricky codicil – no one actually takes out a loan deliberately knowing that they cannot hope to pay it back. But if you’ve never made a single payment or if you’ve defaulted on a large number of them, you’re bound to come under scrutiny and be denied the benefits of the bailout, even though circumstances and bad luck made it impossible for you to keep up with the payments.

So where is the $75 million going? Well, a large part of it is making its way into the pockets of your lenders or loan servicers – for each loan modification (decrease in interest) a lender makes, he or she gets $1000. They also get $1000 every three years if a borrower is regular in his payments for the same period. And they also get $500 for every borrower brought under the umbrella of this plan just before he/she starts missing their payments.

While the details are sketchy at present, we will know more when March 4 arrives and the program unfolds. Till then, it’s best to keep up with your payments and keep your fingers crossed hoping that you’ll qualify.

The housing market has crashed with a resounding boom, and while it has affected everyone associated with the real estate industry, it’s the homeowners who purchased their mortgages a few years ago who are feeling the pinch in more ways than one.

• Many of them have lost their jobs to the recent economic downturn.
• The value of their homes has dropped considerably.
• They are still supposed to pay mortgage according to the original rate, an unfair situation that only leads them deeper into the dark hole of debt.

At the other end of the spectrum, we have the owners of homes and apartments who are looking for tenants to rent their places. The vacancy rate is high, and people are leaving for better deals with regular alacrity. So it’s all they can do to retain occupancy by sweetening the deal for tenants who decide to lock in their leases for a six-month or one-year period or more. Most of them are offering:

• Lower rents
• Better tenant services
• Free rent for the first month
• Half rent for the second month
• Cleaner surroundings
• Room and kitchen upgrades or other similar incentives for those who renew their leases for a year
• More flexibility for tenants like allowing them to keep pets

And so homeowners are faced with a difficult decision – should they continue to pay sky-high mortgages on homes that have dropped significantly in value or walk away from the contract and settle for foreclosure? Should they risk damage to their credit ratings if they foreclose or refuse to pay their mortgages?

At first thought, it’s a hard question to answer, but the more you think about it, the clearer the solution. If you have the financial wherewithal to meet your monthly rent, it’s best to agree to a short sale – the procedure where your home is sold for much less than your mortgage amount. This way, at least you’re cutting your losses at the earliest possibility. If you decide to walk away from the mortgage and are worried about your credit rating, it’s only going to take about three to four years to wipe the slate clean and start again, an option that’s infinitely better than getting into the whirlpool of debt.

So you know what to do – get out of those elephantine mortgages and into an apartment or home that you can rent for a low rate. After all, when the chips are down, the wisest course of action is to play to your advantage!