Details of President Obama’s housing affordability plan have been rolled out and it is estimated to help 1 out of every 9 homeowners obtain a mortgage refinance to avoid foreclosure and stay in their home, even if they owe more than the current value of their home.
Out of the total $787 billion dollar economic stimulus plan, Obama has earmarked $75 billion to alleviate housing and mortgage problems.
Obama’s housing affordability plan took carefully thought and planning. The administration did want to appear to be rewarding some homeowner’s reckless behavior. Therefore, an important part of the stimulus plan is to give aid to those homeowners who are in financial difficulties but have continued to meet their monthly mortgage obligations for the past 12 months. The housing plan does also address, however, those who have fallen behind on payments.
Obama’s housing affordability plan is expected to reach up to 9 million American homeowners through the use of both incentives and a new rule on home equity guidelines.
The government will provide incentives and other subsidies to lenders for completing a mortgage refinance with homeowners who are at risk of foreclosure. Borrowers will be required to detail their financial hardships in signed affidavits. The lenders will use a combination of lowering interest rates to as little as 2%, extending the length of the mortgage, and/or forbearance, to decrease the monthly mortgage payment to 31% of a borrower’s gross monthly income. These mortgage refinances will apply only to first lien mortgages with principal amounts under $729,000 for a single family home.
Obama’s housing affordability plan uses incentives to help achieve these mortgage refinances. The government will pay up to $3,500 to the lender for participation in the program, in addition to utilizing a dollar per dollar matching program to achieve these new monthly payments. The stimulus will also allow the homeowner to receive up to $5,000 in federal money to help them pay other debt obligations and ensure they can continue paying their monthly mortgage. It is important to note, these incentives are for aimed at primary residences, not investment properties.
Obama’s housing affordability plan also takes into account the millions of homeowners who have seen the equity in their homes fall as their home value decreases, in some cases to less that what they owe on their mortgage. Mortgages held by Fannie Mae and Freddie Mac will be eligible for a mortgage refinance with the principal amount not to exceed 105% of the current value of the home.
Obama’s housing affordability plan is a stimulus many need. It will keep millions of homeowners out of foreclosure and in their homes. It will also help put hundreds of dollars in savings into their pockets every month.
To learn more about Obama’s Loan Modification Program you can visit:
CLICK HERE!
Which provides you with valuable resources including:
– Free Sample Hardship Letter
– Top 10 most frequently asked questions about the program
– Up to date guidelines on if you qualify
– Insider tips
– Free sample hardship letter
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