There are 3 main components to the Obama Plan

The plan has three components.

The first would help homeowners who are still current on their payments, but who are paying high interest rates and cannot refinance because they do not have enough equity in their homes, a problem afflicting growing numbers of people as housing values tumble.

A second component would assist about four million people who are at risk of losing their homes. It would provide incentives to lenders who alter the terms of loans to make them affordable for the troubled borrowers.

A third component would try to increase the credit available for mortgages in general by giving $200 billion of additional financial backing to Fannie Mae and Freddie Mac.

Specific Points:

This plan will channel $75 billion towards helping up to 9 million families either. Refinance or Restructure (Modify) their mortgages. Ultimately the aim of this plan is to stabilize housing.

This plan will enable 4 to 5 million Freddie Mac and Fannie Mae loan holders to do the following:

 Refinance at lower rates:

Refinances are now ok if Loan to Value’s are higher than 80%..in other words, you no longer need 20% equity to refinance an Fannie or Freddie loan. Now you can be at 105% Loan to Value (LTV.)

• Fannie and Freddie would take in less cash from loans but they would ultimately lose less due to fewer foreclosures.

Loan Modifications:

Loan Modifications: There are new incentives included in the Affordability and Stability Plan which allows lenders to work with borrowers to modify the terms of loans which are at risk of default or foreclosure. This plan establishes clear guidelines for the mortgage industry that will encourage lenders to modify mortgages on Primary Residences. Lenders who received TARP money from the government MUST meet these guidelines. The reduced / modified payments must be no more than 31% of the home owner’s pre-tax (gross) income. This means people who’s mortgages are more than 31%, on their primary residences PROBABLY qualify for modifications. How does that really work?

 If the lender agrees to bring a mortgage payment down to 38% of the borrower’s income, the government and lender will SPLIT the cost of going down an additional 7 percentage points, down to 31% of the person’s income.

NOTE:

This information was just released on March 5th 2009 and is changing daily. I am involved with an select group of Realtors who will become "Loan Modification Specialist" as well as a "Short Sale Specialist". This advanced certification will allow me to be of better service our customers. 

Here is a link to questions about the program. Q&As

For more information or to determine if you can qualify for any of these programs please give me a call or send me an e-mail.

Aloha,

Eric

 808-989-2274      bigislaneric@gmail.com