Obama Releases Housing Plan to Stop Foreclosure Crisis
admin on February 18th, 2009
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Obama announced his plans to help 9 million Americans save their homes in Mesa Arizona today. According to the NY Times, the plan consists of three objectives:
* The first will help homeowners that are current on their mortgages but paying high interest rates and can’t refinance due to lack of equity or upside down loans.
* The second component will help those at risk of foreclosure by providing incentives for lenders to negotiate the terms of the mortgage to lower payments.
* The third component will ensure credit is available for new loans for buyers by giving another $200 billion in financing to Fannie Mae and Freddie Mac
Obama’s plan goes into affect on March 4th which is when all the details will be available for review. The plan gives $75 billion for loan modifications to reduce payments to 31 percent of the borrowers gross monthly income, but if the lenders believe the incentives will cost them more than going through the foreclosure process as normal, they may not agree with the modifications. Part of the plan, which will have to be voted into law, also calls for allowing bankruptcy trustees to change mortgages during the bankruptcy process, giving borrowers more options to keep their home.
The Obama housing plan is not expected to stop all foreclosures including those who bought knowing they could never make the payments, or investors who bought in order to flip the property for a higher price.
