A few days after the economic stimulus bill President Obama signed the so called Homeowner Affordability and Stability Plan with the goal to stem the flood of foreclosures and keep home owners in their houses.
Here’s how the plan is supposed to work: It should allow homeowners who are not behind in their mortgage payments refinance their loans. The idea is to help “responsible” homeowners. If you have a loan you can’t refinance because the your home is now worth less than the mortgage amount, you may qualify for this program.
There are many limitations, so this program is certainly not for everyone. It only applies to Fannie Mae and Freddie Mac loans. Many subprime loans will not qualify for this program.
Also, your first mortgage can’t be higher than 105% of the marketvalue of the home. The values of many Columbus Houses went down by 30% and sometimes even 50% from just a year ago, people owning these homes will not be able to take advantage of this program.
Here is the most controversial part of the bill – it will help people modify their loand, even if they are already behind or are struggling with their payments. The idea is to reduce your mortgage payments to 31% of your monthly income and make it more affordable. Banks will receive incentives from the government to make these loan modifications.
Obviously, many people are crying “fowl” about this provision, as it appears that the government will subsidize home owners who can’t make their mortgage payments, while borrowers who pay on time have to pay the tap.
We’ll see how this works out. On March 4, 2009, the administration will announce eligibility criteria for these programs. Personally, I don’t see that this program can make a significant impact, because the real problem are the subprime loans which are not covered by this bill, and second, most people struggling with their loan payments are severely overleveraged and their mortgage is much higher than 110% of the current market value. Just take a look at the Columbus HUD Homes Blog to see for how little HUD Homes are selling these days.
Leave a comment and give us your thoughts on the bill!
Thanks for reading our Columbus Loans & Mortgage Blog
Go to here to find great Columbus Houses
0 responses so far ↓
There are no comments yet...Kick things off by filling out the form below.