02-18-09

Following through on one of his main promises Obama today has revealed a plan to help the Average American homeowner to keep their homes. The new program called the Homeowner Affordability and Stability Plan will become available after March 4th, 2009. The plan aims to both help homeowners that are upside down but current and those facing foreclosure.

Under this plan current homeowners will be given the option to refinance into a 30 or 15 year fixed rate even if they are upside down on the home. This will give people that have been current the peace of mind of staying in their home without being threatened by foreclosure by lowering the total monthly payments of the mortgage by refinancing at special low rates.

Homeowners who are facing losing their homes will also be given a chance to refinance into this program which is expected to help up to 9 million Americans stay in their homes by refinancing into special lower rates. The program will allow for refinances up to 105% of the current value of the home, however it will not forgive any money owed on the first mortgage. The general initial guidelines state that your mortgage payment must be more then 31% of your current gross income, the loan must be within Fannie Mae and Freddie Mac loan limits, this MUST be your primary residence, 1-4 units are eligible if you live in one of the units.

This program will start once official guidelines are sent to banks starting March 4th, 2009. The plan also includes major incentives for banks to modify loans that may not fit into the refinance guidelines. As part of the loan modification guidelines banks will be allowed on a case by case basis to make reductions in rate and loan principal. It has also been discussed that bankruptcy judges will possibly be given the authority to force modify loans as a last resort.

Also for every year you are current on the new loan your loan will be paid down $1000 each year for five years up to $5000 off the principle owed.

The White house also urges everyone currently facing foreclosure to contact their lenders to inform them that it is your intention to partake in the Homeowner Affordability and Stability Plan. We will keep up with this story and will publish the official guidelines when they are issued on March 4th.

Discuss the news