In all the discussion and dissension over the $700 billion government bailout intended to stop the downward slide of the economy, it is encouraging to finally hear of some plans to help the "Main Street" we keep hearing about. Since this is where the problems started, it seems reasonable that it may have a place in the recovery.

On November 11, Fannie Mae and Freddie Mac announced a program to help homeowners in default on a loan held by the two entities modify the terms of their loan to possibly forestall a foreclosure. Today, November 20, Fannie Mae went one step further and announced a halt to foreclosures scheduled for November 26, 2008 through January 9, 2009. There are some limitations. It applies to

• All portfolio and MBS pool mortgages owned or guaranteed by Fannie Mae that are currently scheduled for foreclosure

• Foreclosures scheduled for sale from November 26, 2008 through January 9, 2009

• Single family properties only

• Occupied properties only

The purpose of this temporary halt is to allow time to institute the loan modification program announced November 11, which will begin on December 15. That program provides for the following potential options for those mortgages currently in default:

• Repayment Plan: paying off the delinquent amount over time to bring the loan current

• Fannie Mae’s HomeSaver Advance: paying off the delinquent amount with an unsecured loan

• Modifying the Existing Loan: changing the terms of the loan to pay off the delinquent amount and/or lower the monthly payments

• Pre-foreclosure sale: agreeing to sell the property for less than the loan amount (typically a short sale)

• Deed in Lieu of Foreclosure: lender accepting a deed to the property from the borrower and cancelling the debt

Borrowers covered under this procedure should be receiving a letter from the foreclosure attorney or trustee handling their file. That letter will tell the borrower to contact their loan servicer (the company to whom they make their payments), to discuss alternatives to foreclosure.

While Fannie Mae & Freddie Mac hold or guarantee the majority of the home loans in the US, that leaves a lot that are held by individual lenders. This program does not apply to them, but you may find that they are actually more flexible. To qualify for the Fannie Mae/Freddie Mac program, the borrower must be in default. Chase and Washington Mutual (www.wamu.com/wamucares) are working with borrowers who are still current on their payments but can provide evidence of hardship, and there may well be other lender/servicers who are doing so.

The bottom line is that anyone who is behind on their mortgage payments or thinks they are going to get behind on their mortgage payments should get on the phone to their servicer (the place they make their payment) sooner rather than later. While Congress and the federal Administration are trying to figure out where to spend that $700 billion, some lenders are trying to solve the problem where it started.