April 10, 2009
/24-7PressRelease/ -- Article provided by Neff Law Firm, P.A. Visit us at
http://www.neff-law-firm.com.
In February of 2009, President Obama announced his plan to help millions of American families avoid foreclosure on their homes. His Homeowner Affordability and Stability Plan -- sometimes referred to as the Making Home Affordable Program -- is designed to allow homeowners facing bankruptcy or foreclosure the opportunity to restructure or refinance their mortgages. By helping families that are at risk of defaulting on their mortgages to stay in their homes, the Plan is intended to curb falling home prices and, by extension, help support the struggling economy in Minnesota and nationwide.
The Homeowner Affordability and Stability Plan is divided into two parts: the Refinancing Plan and the Loan Modification Program. The Refinancing Plan will not available to all homeowners -- only those with mortgages covered by Fannie Mae or Freddie Mac will be eligible. Further, those seeking to utilize this portion of the program cannot already be behind on their mortgage payments, and cannot owe more than 105 percent of the value of their homes. According to the Department of Treasury, approximately four to five million homeowners will be eligible for help under the Refinancing Plan. The Refinancing Plan will be in effect through 2010.
For those who are already behind on their payments or are at risk of default, the Loan Modification Program may provide some benefit. Under this program, lenders will reduce interest rates to the point that the struggling borrowers' total house payments are not more than 38 percent of their income. At this point, the government will step in and subsidize the lenders dollar-for-dollar, further reducing the house payment to 31 percent of the borrowers' income. (At no point, however, can the interest rate on the mortgage fall below two percent.)
The Loan Modification Program is designed to help any "at risk" borrowers, whether their troubles are a result of job loss or declining income; a hike in an adjustable rate mortgage; or any reason that has put the homeowner in danger of default. Although the Program will run until the end of 2012, each homeowner can only adjust their mortgage loan under the program one time.
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