President Obama unveiled his “Homeowner Affordability and Stability Plan” today which aims at helping stem the tide of foreclosures, and bring respite to hapless homeowners.
The NYT puts a price tag of $75 billion on it, however this is just an estimate. The actual cost may turn out to be much higher, but whats a few billion dollars, if it helps an estimated 9 million homeowners to keep their homes.
The plan lays out the following:
1. If you are current on your mortgage, but are unable to refinance at a lower rate because of a drop in the value of your home, you will have an opportunity to refinance into a 30 or 15 year fixed rate mortgage.
2. In order to be eligible for refinancing – you should owe less than 105% of the current market value of your property.
3. If you have both – a first and second mortgage; the amount due on the first mortgage should be less than 105% of the current market value of your property to make you eligible.
Modify Existing Mortgages
1. If you risk foreclosure, there may be a chance that the terms of your mortgage are modified by your lender. This plan provides incentives to mortgage lenders to modify existing mortgages.
2. It is not necessary to be behind your mortgage in order to qualify for a modification. There are three criteria for eligibility:
- You occupy your house as your primary residence
- Your monthly mortgage payment is greater than 31% of your monthly gross income
- Your loan is not large enough to exceed current Fannie Mae and Freddie Mac loan limits.
The final details of this plan are expected to be released on March 4. At that time the detailed and final plan will be declared.
If you have more questions about this program you can visit this link which has useful information about this process.