Government's housing-rescue plan boils down to two main programs

The government's recently approved plan to help struggling homeowners is full of technicalities, but it basically entails only two basic programs: one that provides refinancing help and another that allows banks to restructure an owner's loan more completely.

Q. I have heard a lot about the federal government's plan to help homeowners who are struggling to meet their payments. What are the details? How can I find out if I qualify?

A. There are lots of technicalities in the plan that was recently approved by Congress and signed into law by President Barack Obama, but it basically boils down to two types of help: a special refinancing program and a more complete loan-modification plan.

The government estimates that up to 9 million homeowners qualify for one program or the other.

To be eligible for the special refinancing program, a homeowner must have at least a 20 percent equity stake in their property and have not missed a payment in the past 12 months. For those who qualify, the government will back loans for banks to refinance the property at today's lower rates. The catch is that the loan must be owned by the Federal National Mortgage Association (commonly called "Fannie Mae") or the Federal Home Loan Mortgage Corp. (Freddie Mac).

Fannie and Freddie buy about half the loans that banks issue, so either agency might own your loan even if you write your monthly check to the bank that originally gave you the mortgage or a loan-service company that processes your payments. Call the bank's customer-service department to find out if your loan is owned by Fannie or Freddie. If it is, you're probably eligible for the refinancing package.

The new loan-modification program works differently. It provides government incentives to banks to lower the interest rates they charge to borrowers to as little as 2 percent and stretch their loan-repayment schedule to 40 years, either of which could save homeowners hundreds or even thousands of dollars each month. The program is not available to those who owe more than $729,750 to their bank, and most financially troubled borrowers qualify because they owe less.

Again, contact your lender's customer-service department for details about the new programs. Also go to the government's Web site, www.MakingHomeAffordable.gov, which includes a tool that can help you determine if you qualify for either program.

Q. We are both 65 years old, and have started looking for a retirement home in different rural communities. Many of the properties have two, three or even four "for sale" signs from different brokerage firms. Where we currently live, homes are listed by only one company. What gives?

A. It sounds as if the rural communities that you're visiting use "open listings" rather than the exclusive-right-to-sell agreements that are common in most urban areas.

City-dwellers who want to sell their home typically sign an exclusive right-to-sell agreement, which guarantees the real estate agent a commission even if the seller finds a buyer on their own. But open listings are common in many rural areas, especially in parts of the nation where there is no Multiple Listing Service to widely advertise properties that are for sale.

An open listing allows a seller to list with several different agents or brokerages, and pay only the broker who is able to produce a buyer who can close the deal. The commission that's owed by the seller under an open listing is usually about half that owed under an exclusive-right-to-sell agreement, because the seller is actually paying the broker to represent the buyer only. However, if the seller finds the buyer on his or her own, no commission is owed at all.

Q. What does the term "NNN" mean?

A. "NNN" is realty shorthand for a triple-net lease, usually involving a business property. The NNN stands for "net-net-net," which means the tenant not only pays the monthly rent, but (unlike many other business leases) also must pay for all of the store or office's share of most other expenses - from the project's utilities and insurance, to janitorial services and other costs. So, in other words, nearly all of the money that the landlord collects is net profit that goes straight to the bottom line.

Q. I was interested in the recent column you wrote about living trusts. My question is, if I create the type of living trust that you suggest, who would I name as the trustee?

A. The trustee is the person who will manage and control the trust's home and other property while you are alive. Assuming that you want to control it as long as you're capable, you should name yourself as the trustee or both you and your spouse as co-trustees.

• For a copy of the booklet "Straight Talk About Living Trusts," send $4 and a self-addressed, stamped envelope to David Myers/Trust, P.O. Box 2960, Culver City, CA 90231-2960

© 2009, Cowles Syndicate Inc.