11 state programs can help you avoid foreclosure

Foreclosure sign outside house

If you're struggling to keep up with an increasingly costly adjustable-rate mortgage -- and are among the great majority of homeowners who can't qualify for the new national rate freeze plan -- you may be able to find help closer to home.

Eleven states have created programs to help homeowners, primarily low- to middle-income families with subprime loans, avoid foreclosure.

All but two allow borrowers to refinance into fixed-rate mortgages they can afford. Delaware and Montana provide the money homeowners need to catch up with missed payments and keep their existing loan.

Here's a summary of how they work and what you must do to qualify.

COLORADO : The HomeStretch Program

Loan Terms: 40-year fixed interest-rate mortgage. An optional zero-interest second mortgage for 3% of the first mortgage -- with deferred payments -- is also available. Maximum loan-to-value for both loans from CHFA is 103%.

Costs that can be financed: Down payment and closing costs as well as prepayment penalties for existing loan.

Current interest rate: 6.75% for first, 7.00% for balance of second which exceeds 3% of first mortgage.

Eligibility: Income restrictions are based on household size and location and range from $66,000 to $116,000. You must have a credit score of 620 or above and have a $500 minimum financial investment (equity is acceptable for refinancings).

Status of existing loan: Must be current on payments.

CONNECTICUT: CT FAMILIES Program

Loan Terms: 30-year, fixed-rate mortgage up to 97.75% of home's value. A second mortgage is also available to some borrowers. Maximum mortgage amount for single-family home is $200,160 to $362,790.

Costs that can be financed: Closing costs and other related expenses, if qualified.

Current interest rate: 6.00%.

Eligibility: Must have a non-FHA insured ARM. Income limits of $81,000 to $162,820 apply based on the location and size of household.

Status of existing loan: Any late payments over the past 12 months must have been caused by higher interest rates. Other recurring monthly debts must have been paid on time.

DELAWARE: Delaware Emergency Mortgage Assistance Program (DEMAP)

Loan Terms: This is not a refinance program, it's a second or third mortgage against the property to help cover the first mortgage. There are two types: a non-continuing loan is a one-time payment to reinstate the delinquent mortgage while a continuing loan will reinstate the delinquent mortgage and assist homeowner with mortgage payments up to 12 months from the date of delinquency. Maximum for both loans is $15,000.

Costs that can be financed: Delinquent payments and fees as well as real estate taxes.

Current interest rate: 3%

Eligibility: Family gross income cannot exceed 115% of the state median income (currently $77,452). Applicant must be suffering a financial hardship beyond his or her control but able to demonstrate a reasonable prospect of being able to resume mortgage payments in the near future. The home cannot currently have more than two mortgages.

Status of existing loan: Must be at least 60 days or more delinquent in payments to meet with counselor and have foreclosure notice when submitting application for loan.

MARYLAND: Lifeline Refinance Mortgage

Loan Terms: 30- and 40-year fixed-interest loans, as well as loans that are interest-only for the first five to seven years. You can borrow up to 103% of the home's value if upfront mortgage insurance premium is financed. Maximum combined loan-to-value cannot exceed 110% with all second mortgages, including forgivable grants.

Costs that can be financed: All closing costs, including prepayment penalties on existing mortgage.

Current interest rate: 6.50% for all products

Eligibility: Income limits vary by county, ranging from $79,000 to $132,300. Maximum appraised value limits also vary by county, ranging from $266,625 to $525,091. If credit score is below 600, Maryland Community Development Authority must review loan file.

Status of existing loan: Must be current.

MASSACHUSETTS: Home Saver Foreclosure Prevention Program

Loan Terms: 30- and 40-year fixed-rate loans up to 105% of the combined loan-to- current-value of the home. Maximum home values apply, up to $417,000 for single-family homes.

Current interest rate: 7.875% for both first and second mortgages.

Eligibility: Borrowers who used a subprime mortgage to cash out equity are not eligible. Income must not exceed 135% of median household income ($108,675) in Boston-area counties and 125% (ranging from $77,250 to $102,250) in others. Must be employed with sufficient, verifiable income. Credit score can be as low as 560.

Status of existing loan: No more than 60 days delinquent at closing of new loan. Delinquencies up to 60 days okay if they were the result of subprime rate resets.

MONTANA: Foreclosure Prevention Loan

Loan Terms: This is not a refinance program, it's a second or third mortgage against the property to pay the past due amount on the first mortgage. The terms vary, depending on the borrower's needs.

Costs that can be financed: It depends on the homeowner's situation and what it would take to make the loan affordable.

Current interest rate: Varies up to 6.5%.

Eligibility: Homeowners must have overcome the circumstances that led to default (such as job loss or illness), have exhausted all other avenues, and are now able to make monthly payments on both their mortgage and the foreclosure prevention loan. If homeowner is not able to do this, the Montana HomeOwnership Network can also help negotiate a short sale (where the lender agrees to take less than the total amount due on the mortgage when the homeowner sells the home) or a "cash for keys" deal (where the lender agrees to take the house back and forgive the mortgage).

Status of Existing Loan: Must have missed at least some payments, be in default and in danger of foreclosure.

NEW JERSEY: Homeownership Preservation Refinance Program

Loan Terms: 30- or 40-year fixed-rate loan up to 100% of the appraised value of the home or 103% if private mortgage insurance is included. Maximum loan amount varies by county, from $320,625 to $550,005.

Current interest rate: 8% for a 30-year loan and 8.125% for a 40-year loan.

Eligibility: Families can earn up to 140% of area median income, from $113,680 to $134,120 depending on location. Must be able to demonstrate financial hardship caused by existing loan and the ability to repay new one. To qualify before a rate reset, borrower must have no late payments during past 12 months and a credit score of at least 575. After a rate reset, borrower may have several late payments during the past 12 months, and there is no minimum credit score requirement.

Status of existing loan: Delinquency allowed only if interest rate has already reset on existing loan.

NEW YORK: Keep the Dream Mortgage Program

Loan Terms: 30-year or 40-year fixed-rate mortgage up to 100% value of the home.

Costs that can be financed: Prepayment penalties and closing costs for new loan.

Current interest rate: 6.25% to 6.75%

Eligibility: Must demonstrate current or future mortgage payment hardship due to interest rate increase. Income may be up to 125% or 165% of the area median, depending on location. Minimum credit score of 575.

Status of existing loan: May be up to 60 days delinquent.

PENNSYLVANIA: Refinance to an Affordable Loan (REAL) and Homeowner Equity Recovery Opportunity (HERO)

Loan Terms: The REAL program offers a 30-year fixed-rate loan up to 100% of home's current appraised value.

Costs that can be financed: Closing costs, prepayment penalties, delinquent property taxes, and delinquent payments from the 12 months following an interest rate reset and payment increase on your existing loan.

Current interest rate: 7.375% to 7.625%

Eligibility: Total monthly debt payments (including REAL mortgage payment) must be less than 50% of gross monthly income (or less than 45% for borrowers with a credit score below 620). Must have a credit score of at least 620 or meet all of the following conditions: a maximum of two, 30-day late payments in the 12 months after the interest rate increased or no late payments in the 12 months prior to the reset. Also, must have no more than three, 30-day late payments on other credit obligations in the 12 months prior to the mortgage adjustment.

Status of existing loan: Up to 59 days delinquent.

Under the HERO program, the Pennsylvania Housing Finance Authority buys your loan directly from the current lender and then offers you a more affordable repayment agreement. It's designed for homeowners who aren't eligible for the REAL program because their credit scores are too low or they owe more than their homes' current appraised value.

Loan Terms: Fixed-rate mortgage for up to 30 years and 100% of home's current value. Property taxes and insurance (mortgage, homeowner's and flood if applicable) are included in the monthly payment. PHFA may also negotiate with current mortgage lender to reduce the amount owed on the property.

Costs that can be financed: closing costs, prepayment penalties, and delinquent property taxes.

Current interest rate: 7.95%

Eligibility: The combined gross annual income of all borrowers may not exceed $120,000 (with exceptions). Sufficient and stable income to support timely repayment of the HERO loan through monthly payments automatically drafted from your bank account.

Status of existing loan: If payments are past due, borrower must demonstrate how the payment amounts have been escrowed, saved, or redirected.

OHIO: Opportunity Loan Refinance Program

Terms: 30-year, fixed-rate mortgage with 20-year fixed-rate second mortgage, up to 105% of the home's value.

Costs that can be financed: closing costs for new loan and fees associated with existing mortgage, including escrow payments, prepayment penalties, late fees, attorney fees or other financing charges.

Current interest rate: 7.5%

Eligibility: Household income can't exceed 125% of your county's median gross income, which ranges from about $73,000 to $84,000.

Status of existing loan: Several late mortgage payments in the last 12 months may be okay.

RHODE ISLAND: Home Saver Loan Program

Loan Terms: 30-, 35- or 40-year fixed-rate or interest-only mortgages up to 100% of home's value, although this can be increased to finance mortgage insurance premium. An interest-only second mortgage up to 10% of home value is also available. Maximum loan limits for a single family home range from $374,000 to $450,000, depending on location.

Costs that can be financed: Closing costs, prepaid items such as taxes, insurance and interest for new loan, delinquent property taxes, mortgage insurance. The second mortgage may also be used to reduce borrower's debt so they qualify for the maximum single debt-to-income ratio of 45%.

Current interest rate: 5.625% for the first mortgage, 6.625% for the second. If annual household income is $45,000 or less, rate is reduced for first two years.

Eligibility: Household income is limited to $77,300 to $113,500, depending on size and location. No minimum credit score. Any bankruptcy must be discharged two years with re-established credit.

Status of existing loan: If loan is delinquent, borrower must have made six months of on-time payments prior to interest-rate adjustment. If extenuating circumstances preclude on-time payments, or the borrower has had several late payments in the last six months, written documentation explaining the circumstances must be provided.