3 New Ways to Get Real Help On Your Underwater Mortgage

To my mind, there's nothing more central to family finances than the family home. And while houses are starting to sell more briskly in some markets again -- even in places like Phoenix that have struggled mightily since the bubble burst -- about one-quarter of all homeowners with mortgages, nearly 11 million in all, are still underwater on their loans.

The good news is that real help for those homeowners is finally available. The bad news is that the paths to that help are so confusing that many people who need the aid those programs offer are unlikely to take advantage of them.

"It's a matter of which programs are available for which homeowners," says Keith Gumbinger, vice president at HSH.com. "Frankly, I'm not sure how anybody in any kind of difficult straits can figure out where to go, get the eligibility stuff straight and actually get help."

So let's break it down, program by program -- because this new assistance is available in several forms.

• HARP 2.0. The second phase of the government's Home Affordable Refinance Program is designed to cast a wider net, so more homeowners will be able to refinance. The major change: There's no longer a maximum loan-to-value ratio (previously, it was 125%), which means you can be far underwater and still refinance. "But perhaps equally as important is that there is no [requirement for] proof of the amount of income -- just that the income exists -- no appraisal of the property, and the chance for reduced fees if the term is shortened to 20 years or less," says Gumbinger. The program is set to run through December 2013.

• The Mortgage Settlement. This is the deal you've no doubt heard about on the news, between the Justice Department and five of the country's biggest mortgage lenders -- Ally Bank, Bank of America (BAC), Citi (C), JPMorgan Chase (JPM) and Wells Fargo (WFC). The $26 billion those banks will pay will primarily be used to provide a little relief to borrowers who are underwater and behind on their payments. Bank of America recently announced that it will attempt to reduce the principal of its qualified borrowers to current market value, which could mean average reductions of $100,000 or more. If your mortgage is held by one of these banks and you're underwater, contact the lender to see if you qualify. Note that while many mortgage relief programs -- including HARP -- are only available to borrowers who have loans owned or guaranteed by Fannie Mae or Freddie Mac, this settlement deal is the opposite: Your loan must be serviced by one of the five aforementioned banks to be included in the settlement.

• FHA Streamlined Refi. If you have an FHA loan that was endorsed on or before May 31, 2009, (ask your lender if you're not sure) and you've made the last 12 months of payments on time, you may be eligible to refinance for less. Beginning June 11, FHA's Upfront Mortgage Insurance premium will be reduced to 0.01% and the annual fee cut in half, to 0.55%. The move could save FHA borrowers an average of $3,000, according to the Department of Housing and Urban Development.

Now, here's the sad truth: Even if you qualify for and receive some of this assistance, after all is said and done, your home may still be underwater. So Gumbinger and HSH.com have rolled out two new calculators to help you make informed decisions about your options. The first, called KnowEquity When, will tell you when you'll break the surface and owe less on your home than it's worth. The second, KnowEquity How, will tell you what you need to do to get above water again by a specific date.