The Federal Reserve Bank unveiled it’s new plan to modify the mortgages it currently owns.  These mortgages were given as collateral from banks so they (the banks) could have access to Fed money. For example, when a bailout of a bank such as JP Morgan Chase occurs, they offer up their troubled assets (mortgages) as collateral for the money they receive.

 The Fed will instruct the servicers of the mortgages to identify borrowers who are starting to fall behind, who might be eligible for mortgage modification.  The possible modification could be to interest rates, length of the loan and principal reduction.

So if you are a troubled borrower, and have fallen behind on your payments, will your mortgage receive modification from the Fed? 

Maybe.  It’s impossible for a borrower to even know if their mortgage is owned by the Fed.  And if it is, you’ll need to be eligible for modification.

So, what should a troubled homeowner do?

Wait (actually, don’t wait – exhaust every other option).  If you receive a letter in the mail, or a call from your lender that your mortgage is owned by the Fed, and it is eligible for modification then you may have a  chance.

Don’t hold your breath on being notified about a possible mortgage modification from the Federal Reserve.  Be proactive, and do everything you can to make it happen on your own.  First and foremost, contact your lender, and let them know you need help.