Homeowner Affordability and Stability Plan

Published by julia | Filed under Buyer / Seller Tips, Real Estate, Shout Outs

President Obama’s administration’s “Homeowner Affordability and Stability Plan” could help as many as 9 million homeowners, but largely those in lower-cost housing areas.

Under the refinancing provision of the plan, homeowners with less than 20 % equity in their homes, who now find it difficult  or nearly impossible to refinance their home, will get new loans at lower interest rates provided the new note doesn’t exceed 105% of the home’s current value.

A refinanced mortgage replaces the old loan with a new one. This provision will target nearly 4 to 5 million homeowners.
The loan modification part of the plan targets 3 to 4 million homeowners who are considered to be at risk, those with a high mortgage debt-to-income ratio and those with mortgages larger than the value of their home.  A loan modification changes the terms of the existing loan without writing a new one.  The modification plan is open to anyone with a loan that has a balance under Fannie Mae and Freddie Mac limits, which now as high as $729,750.

The modification program is also designed to standardize the modification efforts by lenders. The modification program also comes with incentives for both homeowners and lenders.  Loan services get up to $4,000 for modifying mortgages and borrowers get a principal reduction of up to $5,000 over five years for paying on time.