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Who's Eligible For Obama's Mortgage Plan?

On Wednesday, President Obama laid out a $75 billion plan to help millions of Americans refinance their mortgages and avoid foreclosure. So who qualifies and how can you benefit?

Early Show financial adviser Ray Martin answered some questions from Early Show co-anchor Harry Smith as well as the public.

"Listening to the president yesterday, really two tiers of people they are seeking to help here. Explain who might get bailed out," Smith said.

"There are two parts of the program -- loan modification and loan refinancing. On loan modification, this is aimed at folks that are in dire straits. Their monthly mortgage payment far exceeds 31 percent of their pre-tax monthly income. It might be 50, 60, 70 percent of their income; it's not sustainable to keep paying that. This provides government subsidies and incentives to financial institutions to chop down their interest rate, possibly lower their principal, even stretch out the mortgage to bring the monthly payment down to 31 percent of their pre-tax income," Martin said.

"And the other group that is about to be helped are all these folks who are going under water," Smith said.

"This is folks who are current on their payment. Their monthly payment is 31 percent or less of their pre-tax income. They'd like to refinance to take advantage of a 5 percent interest rate, but they can't because the value of their home is at or slightly below what their mortgage is. So, the mortgage might be 105 percent of the value of the home and shrinking. They'd like to refinance, but for that obstacle, now those with underwater loans, slightly underwater or significant size loans can refinance and get that out of way," Martin said.

"When will people be able to get a piece of paper and fill something out and be able to make this work for them?" Smith asked.

"According to the fact sheet released by the White House yesterday, the details of this program will be announced on March 4th, next month, and they're going to be able to call their lender and say, 'Am I eligible for a loan refinance or modification?' In the meantime, get all the financial documents in order and get ready to call the lender," Martin explained.

Martin also answered a few questions from the Early Show audience. To watch a video of the segment and that Q&A, click the play button below:

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