New Initiatives To Help Homeowners
President Obama recently unveiled his plan to help stabilize the housing market and keep millions of borrowers in their homes.
More details are to be released March 4.
What We Know Right Now:
Refinancing Initiative
Under current rules, those families who own less than 20% equity in their homes have a difficult time refinancing and taking advantage of the historically low interest rates. This initiative is open to homeowners who have conforming loans which are guaranteed by Fannie Mae and Freddie Mac, and who owe up to 5% more than their home is worth.
Stability Initiative
This initiative is designed to provide help to families as well as entire neighborhoods by helping reduce foreclosures and stabilize home prices. It is intended to help homeowners who are struggling to afford their mortgage payments, but cannot sell their homes because prices have fallen significantly.
The goal of this initiative is simple: "reduce the amount homeowners pay per month to sustainable levels." To accomplish this, lenders are encouraged to lower homeowners' payments to 31 percent of their income by lowering their interest rate to as low as 2% or by extending the terms of the loan. In addition, lenders can also lower the principal owed by the borrower, with Treasury sharing the costs.
More Info
A question and answer document is available HERE courtesy of the National Institute of Financial Education. I'll provide updates as I receive them, and if you want to learn more after March 4th, please send me a note.
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