Obama’s Plan for Homeowners: Know the Facts
February 15th, 2012 -- by Bill Ivey
“About 11 million Americans — roughly 1 in 4 with a mortgage — are underwater,” according to CoreLogic, a real estate data firm.
The Obama administration announced its latest plan to help troubled homeowners, enabling an estimated 3.5 million underwater mortgage holders to refinance at today’s historically-low interest rates.
However, experts speculate the proposal—which is expected to cost up to $10 billion and would be paid for by imposing a fee on major banks—could have a difficult time getting Congressional approval.
This proposal follows a string of government-initiated programs that have had mixed success, including the Making Homes Affordable Program a government program that claimed:
“There are a variety of MHA programs that may help homeowners having difficulty making mortgage payments. . . . Maybe your expenses have increased due to medical bills or you’re picking up the pieces after a separation or divorce. Maybe you’re trying to get by with less because your hours were cut or your business stumbled. In any case, it’s important to be proactive. MHA can help you get real help and real answers right now.”
Obama noted in a recent press conference that the MHA program had “fallen short of expectations.” The difference now is, Obama’s latest plan would assist borrowers with private (non-government backed) loans. Some of Obama’s comments include:
“I am sending Congress a plan that will give every responsible homeowner in America a chance to save about $3,000 a year on their mortgage by refinancing at historically low rates,” he told an audience in Falls Church, Va. “No more red tape. No more runaround from the banks.”
“I want to be clear: this plan, like the other actions we’ve taken, will not help the neighbors down the street who bought a house they couldn’t afford, then walked away and left a foreclosed home behind. It will not help those who bought multiple homes just to speculate and make a quick buck.”
Under the current proposal, to be eligible borrowers (about 11 million whose loans are backed by Fannie Mae and Freddie Mac, and about 3.5 million whose loans are privately held) must:
- Have not missed a mortgage payment in the past six months, and have no more than one late payment in the six months prior;
- Have a credit score of 580 or higher;
- Have a current mortgage balance within loan limits for FHA-insured loans in their communities; and
- The property must be their primary residence
It’s important to remember that this program would require Congressional approval, which may never happen.
Obama closed his proposal with this sobering fact, “No program or policy will solve all the problems in a multitrillion-dollar housing market. The heights the housing bubble reached before it burst were unsustainable. It will take time to fully recover. And it will require everyone to do their part.”
If you are on the edge, if you are facing foreclosure and desperate for help, don’t let the media talk of this proposal distract you from finding a real solution.
Related Articles:
Mortgage Relief Plan Aims at Refinancing – New York Times
Obama’s Mortgage Relief Plan Is Immediately Attacked By The Right-Wing Media – Media Matters
Helping Responsible Homeowners – Obama
This post was written by
Bill Ivey – who has written 85 posts on Enterprise Realtors Blog.
Bill Ivey, Certified Distressed Property Expert Broker/Owner, Enterprise Companies (901/857-3888) If you know anyone who is behind or about to be behind on their mortgage and doesn't know what to do, please have them call me immediately! I can help them avoid foreclosure.
Tags: avoiding foreclosure, Fannie Mae, Freddie Mac, Obama Refinancing Plan 2012, Refinancing