A Helping Hand for Harried Homeowners

At this Save the Dream event, homeowners won't be refinancing their loans, Marks said. They won't be getting loan modifications that only fix their mortgage crisis temporarily. They won't be offered adjustable-rate mortgages.

Instead, based on its own underwriting system, NACA will take homeowners through four steps, including a forensic-type examination of their budgets.

"We are going to be doing what should have been done on Day One of when they got that mortgage," Marks said. "We are going back to the basics."

By documenting people's net income and expenses, such as food and utilities, housing counselors will analyze a participant's financial situation and figure out the mortgage amount that homeowner can truly afford long-term.

Homeowners have to bring pay stubs, bank statements and other financial information. Free credit reports will also be pulled to check other liabilities.

Once all their information is verified, NACA will present restructuring packages, which may include drastically reduced fixed-rate mortgages, to loan servicers. In some cases it could result in a reduced loan amount. All the rates under their program are fixed for 30 years, Marks said.

Here are two examples of mortgage restructures that were approved by servicers working with NACA's Home Save program:

· Joseph and Kathleen Renaud of Worcester, Mass., renegotiated their 11.875 percent loan with Countrywide to a fixed 5.25 percent. Monthly savings: $830.

· Melody Weathersby of Jackson, Miss., restructured her 14.625 percent loan with GMAC Homecomings Financial to a 6.75 percent fixed rate. Additionally, she cut her mortgage debt by $20,000. She's saving $300 a month.

If the loan amount is actually reduced, servicers may agree to write off the amount or attach it to the balance owed. But the money owed would only be repayable if the borrower sells the home for a profit or does a cash-out refinance.

This process may be hard for some people. Getting a restructured loan package means participants have to agree to operate under a bare-bones budget. That means eliminating unnecessary expenses. Some people may have to cut back on their cable TV or cellphones if such monthly expenses are deemed too high. Some may be forced to downsize to a less-expensive car or sell a second family vehicle.

"People are going to have to reduce their standard of living," Marks said. "There are going to be a lot of shared sacrifices."

I like what NACA is doing. If there is going to be a meaningful fix to the current housing crisis, there will need to be pressure like this on financial institutions -- and everyone is going to have to sacrifice.

· On the air: Michelle Singletary discusses personal finance Tuesdays on NPR's "Day to Day" program and athttp://www.npr.org.

· By mail: Readers can write to her at The Washington Post, 1150 15th St. NW, Washington, D.C. 20071.

· By e-mail:singletarym@washpost.com.

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