Obama’s new housing refinance plan

Fannie and Freddie did play a significant part in the financial panic, Zandi says.

“As financial conditions began to weaken in 2007 and the private mortgage industry pulled back, the agencies partially filled the void. This was their chance to get back in the game,” writes Zandi.

But, as Zandi concludes, “despite Fannie and Freddie’s role in the panic, it is wrong to blame them for creating it; that distinction belongs rightly to the private mortgage market.”

Text Chat Today

Let’s talk.

Join me at noon ET for an online text chat with Carl Richards, author of “The Behavior Gap: Simple Ways to Stop Doing Dumb Things with Money,” which was the Color of Money book club selection for January. Here’s the review of his book.

Be sure to send your questions in early or read the archives later.

Mortgage Help for the Jobless

Unemployed borrowers whose mortgages are owned or guaranteed by Fannie Mae or Freddie Mac may be eligible for up to 12 months of forbearance, reports real estate columnist Kenneth R. Harney.

Forbearance is a process in which a lender or mortgage servicing company suspends or reduces required monthly payments for a specific length of time. Forbearance does not mean a forgiveness or reduction of the principal balance on the mortgage. “Think of it instead as a timeout,” Harney says. “Whatever amounts go uncollected during the forbearance period must eventually be repaid.

On loans they own or have securitized, Fannie and Freddie are now directing servicers to forbear when a borrower can show that he or she has lost a job, Harney reports.

Servicers can grant six months of reduced or suspended payments without getting special permission. If unemployment continues beyond six months and the lender or servicer believes the borrower needs more time, it can ask Fannie or Freddie for approval to extend the forbearance. During any unemployment forbearance period under the rule revision, borrowers will not be subject to foreclosure, even if they had fallen behind on payments before the forbearance began.

Fannie Mae’s policy becomes mandatory for all loan servicers on March 1. Freddie Mac’s policy took effect this week.

Here are some of the program’s terms for eligibility:

— You must have a financial hardship due to unemployment.

— The property must be your principal residence.

— Second homes, investment properties and properties that are vacant, condemned or abandoned are ineligible.

Here are the links for more details about eligibility for unemployment forbearance:

— Freddie Mac

— Fannie Mae

Class Warfare

President Obama’s recent State of the Union speech addressed an array of issues from the economic disparity between the wealthy and middle class to the affordability of a college education.

“Higher education can’t be a luxury,” Obama said. “It’s an economic imperative that every family in America should be able to afford.”

For last week’s Color of Money questions, I asked: “What economic proposals do you hope get passed?”

“I would like to see incentives developed to encourage manufacturing in America and disincentives for companies to ship manufacturing jobs overseas,” wrote Albert Tindall of Grapevine, Tex. “Partner with community colleges to educate our people with the skills needed to support demands of high tech manufacturing.”

Others want to see more to make education affordable.

“Education to me is the big one,” said Adam Herbst of River Edge, N.J. “Everyone agrees that you need a good education in order to be a good tax-paying citizen in the future. So let’s get together and decide what skills are going to be needed to compete in the future, both on a national and personal level, and design schools so that this can be done.”

Tia Lewis contributed to this e-letter.

You are welcome to e-mail comments and questions to singletarym@washpost.com. Please include your name and hometown; your comments may be used in a future column or newsletter unless otherwise requested.