Here's some unexpected good news for real estate investors and second home owners facing payment squeezes on their mortgages.

Fannie Mae has just come up with some help for people who don't qualify for the Obama administration's "home affordable modification program," also known as "HAMP."

Starting this week, Fannie will consider requests for temporary payment reductions on investor and second home loans in its portfolio where borrowers have either already gone delinquent or are on the verge of falling behind.

The new program, which Fannie calls the "Payment Reduction Plan," or "PRP," permits loan servicers of Fannie-owned investment and second home loans to cut distressed borrowers' payments by as much as 30 percent per month for as long as half a year.

The idea is to provide some transitional time that allows the servicer and borrowers to figure out the best way to avoid foreclosure.

Here's how it works. First, you've got to be able to show the servicer that you've encountered a financial hardship, are in danger of going delinquent or already have, and that you are not eligible for a federal loan modification program because you're an investor or second home owner.

All of the White House loan relief plans to date have excluded investors and second home owners, leaving large numbers of distressed owners with nowhere to go but foreclosure.

Here's how to qualify for the new Fannie program:

First of all, your loan has to be in Fannie's portfolio or in a mortgage-backed bond that Fannie has guaranteed. Your servicer can tell you whether that is the case.

You've also got to be prepared to demonstrate that you have the financial resources to pay at least 70 percent of your regular monthly payment for the next six months.

Even if your loan already is somewhere in the foreclosure process, you might still get a reprieve -- and lowered payments -- if the scheduled foreclosure sale is more than 45 days from the date you enter Fannie's new payment reduction plan.

During the six months of lowered payments, the servicer and you are supposed to work together to come up with a permanent solution, which could involve modification of the loan terms.

However, if at any point in the six month period, you fall behind on your reduced payments, the whole program could come to a screeching halt. You've got to pay on time at the lower, agreed upon number, or they pull the plug -- and you go to foreclosure.

If you think you might qualify, talk to your loan servicer as soon as possible.

Published: October 30, 2009

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Kenneth R. Harney writes an award-winning, nationally-syndicated column on housing and real estate from Washington, D.C. He is also managing director of the National Real Estate Development Center, a professional education company. He is a past member of the Federal Reserve Board's Consumer Advisory Council, a committee that by federal statute reviews all Fed actions on home mortgage, consmer credit and banking industry regulation. He served as a member of the U.S. Department of Housing and Urban Development's Working Group on Computerized Loan Origination (CLO) systems, and is a member of the Editorial Board of the Fannie Mae Foundation's journal, Housing Policy Debate. He is the author of two books on mortgage finance and real estate.