Obama Team Announces Mortgage Relief Plan for Struggling Homeowners
Home Buying News - February 18, 2009 -- President Obama's economic team is introducing an extensive mortgage relief plan today. It will cost somewhere in the neighborhood of $75 billion and is intended to help millions of homeowners at risk of foreclosure.
Critics of President Obama have frequently complained that his economic stimulus plan did not focus on the housing and mortgage crisis as much as it should. But there was a reason for that. Obama and his economic team realize that the housing crisis is big enough to warrant a program of its own. That's why they are introducing their $75 billion mortgage relief plan today.
Here's a summary of the new mortgage relief program and what it aims to do:
This is the number-one question we've been getting from readers. Unfortunately, it's the hardest one to answer. Write down March 4th on your calendar, because that's when many of the finer details are set to be announced. In the meantime, here is what we could find about eligibility.
Real estate investors and speculators need not apply. President Obama has stressed, time and time again, that this program is designed to help homeowners who "played by the rules" but still fell victim to the housing crisis.
Additionally, at his Mesa, Arizona press conference, the president emphasized that the relief plan is not intended to help:
Until the further details come out on March 4, I recommend doing the following. First, watch the Obama speech. You'll be able to find it on YouTube very soon, and it may be on the White House website as well. Listen to what he says about eligibility for the program.
If, after listening to his announcement, you feel you might be qualified, you should start gathering your loan documents and other financial records such as pay stubs and W2's. We don't know the exact steps for seeking assistance at this point, but it's a safe bet you'll need the aforementioned documents.
Related articles at the Home Buying Institute:
Critics of President Obama have frequently complained that his economic stimulus plan did not focus on the housing and mortgage crisis as much as it should. But there was a reason for that. Obama and his economic team realize that the housing crisis is big enough to warrant a program of its own. That's why they are introducing their $75 billion mortgage relief plan today.
Here's a summary of the new mortgage relief program and what it aims to do:
- For the most part, this relief plan is designed to help two overlapping groups of homeowners -- those who are facing foreclosure, and those who owe more on their homes than the home is currently worth.
- The relief plan will help many homeowner who are upside down in their mortgage loans refinance into more affordable loans. It will also give mortgage lenders more incentive to modify home loans for people at risk of foreclosure, people who fit a certain at-risk "profile." In other words, it will make mortgages more affordable for struggling homeowners, either by refinancing or restructuring the loans.
- Incentives for home loan servicers would include $1,000 for each modification, plus an additional $1,000 a year for three years if the homeowner stays current on the mortgage.
- The mortgage relief plan is more ambitious, and expensive, than expected. It was initially said to be a $50 billion plan but could now exceed $75 billion.
- Why is it such a big plan? Because nearly 3 million Americans could face foreclosure throughout the rest of 2009, a higher foreclosure rate than ever before in history.
- Previous plans have focused only on homeowners who were already behind on their payments. This program broadens the coverage to include homeowners who are current on payment but may still face foreclosure.
Do I Qualify for Assistance?
This is the number-one question we've been getting from readers. Unfortunately, it's the hardest one to answer. Write down March 4th on your calendar, because that's when many of the finer details are set to be announced. In the meantime, here is what we could find about eligibility.
- On the refinancing side, the program will focus on homeowners who owe more than 80% of their home's current appraised value.
- On the loan modification side, the program will help people with mortgage payments exceeding 31% of their gross monthly income.
Real estate investors and speculators need not apply. President Obama has stressed, time and time again, that this program is designed to help homeowners who "played by the rules" but still fell victim to the housing crisis.
Additionally, at his Mesa, Arizona press conference, the president emphasized that the relief plan is not intended to help:
- "Speculators who took risky bets on a rising market for homes not to live in but to sell."
- "Folks who bought homes they knew, in the beginning, they could not afford."
Until the further details come out on March 4, I recommend doing the following. First, watch the Obama speech. You'll be able to find it on YouTube very soon, and it may be on the White House website as well. Listen to what he says about eligibility for the program.
If, after listening to his announcement, you feel you might be qualified, you should start gathering your loan documents and other financial records such as pay stubs and W2's. We don't know the exact steps for seeking assistance at this point, but it's a safe bet you'll need the aforementioned documents.
Related articles at the Home Buying Institute:
Labels: Economy
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