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by Jace Stolfo
on Wednesday, February 25th, 2009 at 10:23pm.
The Obama Administration has begun laying out its Homeowner Affordability and Stability Plan. The plan will have three areas of emphasis and is expected to help 7 to 9 million homeowners avoid foreclosure and others refinance into more affordable loans. Complete details of the plan are expected by March 4, 2009. Below is a summary of the United States Treasury press release.
1) Refinancing assistance to combat equity hurdles. Interest rates have been at record lows in recent months but many homeowners do not have the equity to allow them to refinance and benefit from reduced mortgage payments. This new program will allow responsible borrowers to refinance and is expected to benefit 4 to 5 million homeowners.
2) A stability initiative to prevent foreclosures. 75 Billion dollars will be devoted to helping borrowers avoid foreclosure by the following elements:
a) Loan modification- Temporarily help those who commit to make reasonable monthly mortgage payments to stay in their homes. This program will help those who have a high mortgage debt to income ratio and offers incentives to those who proactively use these options before defaulting.
b) Clear loan modification guidelines - Clear and consistent guidelines for modifications to prevent foreclosure and enable mortgage servicers to act without the fear of lawsuits.
c) Requiring stability plan recipients to use guidance for loan modifications: The Treasury Department will require all recipients to participate in foreclosure mitigation plans consistent with Treasury’s loan modification guidelines.
d) Allowing judicial modifications of home mortgages during bankruptcy.
e) Strengthening FHA programs and providing support for local neighborhoods: This includes easing restrictions on the Hope for Homeowner program, grants for innovative programs that prevent foreclosures, and renter assistance to reduce homelessness.
3) Support low interest rates. The Treasury Department is increasing its funding to Fannie Mae and Freddie Mac to ensure the strength and security of the mortgage market and to help maintain mortgage affordability.
Information not guaranteed.