I've heard that the Obama stimulus package will have provisions for some Massachusetts homeowners to refinance at better rates and without the 20% equity requisite in most loans. Is this true and if so who qualifies for it?

The stimulus package has been passed by both houses of Congress and has been signed by the President. The U. S. Department of the Treasury has promulgated guidelines and a program description outlining how lenders may modify existing loans with homeowners who are in danger of being in default. The principal terms are as follows: 
Eligibility and Verification

• The mortgage loan must have originated on or before January 1, 2009.
• It applies to first mortgage loans on owner-occupied properties with unpaid principal balances of up to $729,750. Higher limits are allowed for owner-occupied properties with two to four units.
• All borrowers must fully document income including signed IRS documents, two most recent pay stubs and the most recent tax return and the borrowers must sign an affidavit of financial hardship.
• Property owner occupancy status will be verified through borrower credit report and other documentation; no investor –owned, vacant or condemned property will qualify.
• Incentives are provided to lenders and loan servicers to modify at risk borrowers who have not yet missed payments or when the servicer determines the borrower is at imminent risk of default.
• Modifications can start from now until December 31, 2012; loans can be modified only once under the program.
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• The lender is required to use a series of sophisticated calculations to calculate the net present value on each loan that is at risk of imminent default or at least 60 days delinquent.
• The lender is required to follow a specified sequence of steps in order to reduce the monthly payment to no more than 31% of the borrower's gross monthly income.
• The modification sequence requires first reducing the interest rate (subject to a rate floor of 2%), then, if necessary, extending the term or amortization of the loan of up to a maximum of forty years and then, if necessary, forbearing principal.
• The monthly payment includes principal, interest, taxes, insurance, flood insurance, homeowners association and/or condominium fees. Monthly income includes wages, salaries, over time, fees, commissions, tips, Social Security, pensions, and all other income.
• There are a number of “success” incentives put into the program for payments to the lenders and to the borrowers by way of forgiveness of principal if the borrower stays current in the modification.
• The loan modifications will be effected through a modification of the existing loan and not a refinance of the mortgage loan.