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Homeowner Affordability and Stability Plan |
Stimulus Package Includes Mortgage Assistance: See How You Can Benefit
President Barack Obama has a lot of plans to combat the current recession in the United States. One of the ways is assisting homeowners with their mortgages. The Homeowner Affordability and Stability Plan is estimated to be $75 billion dollar effort.
The Administration believes this effort can help up to 9 million homeowners to get lower interest rate mortgages.
The government is attempting to use this program to help qualified homeowners refinance to benefit from the new low interest rates. It also makes this a beneficial to lenders to assist you in such an undertaking and giving you much more affordable levels.
This program is the most benefit to people who have kept their mortgage payments current because a lot of homeowners who have kept current have trouble lowering costs through refinancing due to the falling prices of houses.
In default or at risk? You still may qualify for loan restructuring. Those with a high combined mortgage debt compared to their income might be eligible for modification.
Those with high amounts of any other debt such as car payments or credit card debt which goes beyond 55% of their income might still qualify for modification but must accept debt counseling.
If you owe more than your home's market value, you may not qualify for refinancing. 20% or more equity in your home is required unless it is through an FHA loan.
If you have debt that goes beyond the house value by 5% or more you still may qualify. It should also be noted that in this plan there are also no repayment penalties (for loans owned/backed by Fannie Mae or Freddie Mac.)
You are not eligible for this program if your property values have fallen drastically (more than 5%) and if you have a “jumbo” mortgage. These are usually mortgages that exceed $417,000. However, you should check with your servicer/lender after 3/04/09 to make sure which kind of mortgage you presently have and if you can qualify.
Once you do qualify you have to prove that you have enough income to keep up with your loan payments for the mortgage.
Qualifying borrowers will have their monthly payments reduced by 31% of your gross income. These rates would stay in place for five years then slowly revert to conforming loan rates that are currently then standard.
Most will see reductions in terms of interest rates but in certain scenarios principal reduction is possible.
You are not eligible at all if – You bought the house for investment purposes. Only homeowner/occupants can qualify for this type of program. Nor will you qualify if you misrepresented your income or in any other way are irresponsible.
If you were not able to afford your home when you originally bought it, you may also be out of luck, as Obama said: “This plan will not save every home." In order to protect taxpayers' dollars there won't be modifications unless there is a savings compared to the price of foreclosure.
This will also disqualify you if you can't afford any mortgage payment at all.
The House Bill That Can Turn Your Life Around
The House of Representatives in the United States Congress is expected to pass a bill that would allow bankruptcy judges to help ease mortgage debt for individuals facing mortgage debt and help them reshape their loans.
This piece of legislation would help build upon the capacity in which Federal Deposit Insurance Corp (FDIC) operates. It would work with bank failures and make a permanent increase in the insured deposit which as of now limited $250,000.
This could help turn the tide in the housing market and recession because it would allow these judges to adjust your debt as they can currently with other amounts of consumer debt.
This means they could erase some of the principal troubled debt from home loans.
The bill also contains a provision that offers liability protection to mortgage services who process modifications for drowning borrowers, making it a potential win-win situation.
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