Up to 9 Million Families to Get Mortgage Help Through Obama’s Housing Plan
By: Diane Tuman, Zillow Content Manager | February 18, 2009
President Barack Obama unveiled the $75 billion “Homeowner Affordability and Stability Plan” today, which promises to help “… up to 7 to 9 million families restructure or refinance their mortgages to avoid foreclosure. In doing so, the plan not only helps responsible homeowners on the verge of defaulting, but prevents neighborhoods and communities from being pulled over the edge too, as defaults and foreclosures contribute to falling home values, failing local businesses, and lost jobs.”
Coupled with the $787 billion economic stimulus bill Obama signed into law yesterday (the”American Recovery and Reinvestment Act), these massive billion dollar plans hope to make a dent into the dire straits the U.S. economy and housing market are in.
Here are 3 key elements to the homeowner affordability plan (from HUD):
1. Refinancing for Responsible Homeowners Suffering From Falling Home Prices
- Provide the opportunity for up to 4 to 5 million responsible homeowners expected to refinance: Mortgage rates are currently at historically low levels, providing homeowners with the opportunity to reduce their monthly payments by refinancing. But under current rules, most families who owe more than 80 percent of the value of their homes have a difficult time securing refinancing. (For example, if a borrower’s home was worth $200,000, he or she would have limited refinancing options if he or she owed more than $160,000.) Yet millions of responsible homeowners who put money down and made their mortgage payments on time have – through no fault of their own – seen the value of their homes drop low enough to make them unable to access these lower rates. As a result, the Obama Administration is announcing a new program that will provide the opportunity for 4 to 5 million responsible homeowners who took out conforming loans owned or guaranteed by Freddie Mac and Fannie Mae to refinance through the two institutions over time.
- Reducing monthly payments: For many families, a low-cost refinancing could reduce mortgage payments by thousands of dollars per year. For example, consider a family that took a 30-year fixed rate mortgage of $207,000 with an interest rate of 6.50% on a house worth $260,000 at the time. Today, that family has $200,000 remaining on their mortgage, but the value of that home has fallen 15 percent to $221,000 – making them ineligible for today’s low interest rates that generally require the borrower to have 20 percent home equity. Under this refinancing plan, that family could refinance to a rate near 5.16% – reducing their annual payments by over $2,300.
- No aid for speculators: This initiative will go solely to helping homeowners who commit to make payments to stay in their home – it will not aid speculators or house flippers.
- Complete eligibility details will be announced on March 4th when the program starts.
2. A Comprehensive $75 Billion Homeowner Stability Initiative
The Treasury Department, working with the GSEs, FHA, the FDIC and other federal agencies, will undertake a comprehensive multi-part strategy to prevent millions of foreclosures and help families stay in their homes. This strategy includes these features:
- Homeowner Stability Initiative to reach up to 3 to 4 million at-risk homeowners
- Clear and consistent guidelines for loan modifications
- Requiring that financial stability plan recipients use guidance for loan modifications
- Allowing judicial modifications of home mortgages during bankruptcy when a borrower has no other options
- Require strong oversight, reporting and quarterly meetings with treasury, the FDIC, the federal reserve and HUD to monitor performance
- Strengthening FHA programs and providing support for local communities
3. Support Low Mortgage Rates by Strengthening Confidence in Fannie Mae and Freddie Mac
Ensuring Strength and Security of the Mortgage Market: Today, using funds already authorized in 2008 by Congress for this purpose, the Treasury Department is increasing its funding commitment to Fannie Mae and Freddie Mac to ensure the strength and security of the mortgage market and to help maintain mortgage affordability.
- Provide Forward-Looking Confidence: The increased funding will enable Fannie Mae and Freddie Mac to carry out ambitious efforts to ensure mortgage affordability for responsible homeowners, and provide forward-looking confidence in the mortgage market.
- Treasury is increasing its Preferred Stock Purchase Agreements to $200 billion each from their original level of $100 billion each.
- Promoting Stability and Liquidity: In addition, the Treasury Department will continue to purchase Fannie Mae and Freddie Mac mortgage-backed securities to promote stability and liquidity in the marketplace.
- Increasing The Size of Mortgage Portfolios: To ensure that Fannie Mae and Freddie Mac can continue to provide assistance in addressing problems in the housing market, Treasury will also be increasing the size of the GSEs’ retained mortgage portfolios allowed under the agreements – by $50 billion to $900 billion – along with corresponding increases in the allowable debt outstanding.
Is your head spinning yet? This is a lot to take in, but it looks like refinancing, which has been all the rage lately, will really kick into high gear when the program goes into effect March 4. And, Wall Street seemed to like the mortgage relief plan as stocks went higher today. Obama’s plan is, in effect, saving people who are potentially facing foreclosure (hey, maybe the Prez read your Dear President Obama letter, Justin!)
Here are some helpful FAQs to try to make sense of the plan:
- Q&A for homeowners (White House)
- Three examples of how the homeowner stability plan can work (Dept. of Treasury)
Turn to Zillow Advice to see what others are saying:
- Stumble it!
- Categories: Real Estate Industry, Zestimate
Comments
32 Comments so far
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ghaas on February 18, 2009 2:19 pm
Is this plan up for approval or has it already been passed?
Homeowners Facing Foreclosure Just Want to be Heard | Zillow® Blog on February 18, 2009 4:01 pm
[...] message — “I WANT 2 BE HEARD.” After President Obama unveiled the $75 billion “Homeowner Affordability and Stability Plan” this morning, people are abuzz with thoughts about the plan, and how it will impact [...]
Sam on February 18, 2009 7:27 pm
Great job of supporting this blog. But I have a question regarding the 3 examples that have been put forth in the document annoted (Dept. of Treasury). It does not seem to have an example where in the new house value has plummeted to much below what is owed on the mortgage. That is the seriously “underwater” homeowner.
Can someone please provide info on how the plan will work out on a case where -
2006 Home value = $434,000
2009 Value = $ 247,000
Loan amount outstanding = $334,000
Will they be able to refinance?
Thanks in advance
Drew Meyers on February 18, 2009 8:44 pm
Sam-
I would ask that question in Zillow Advice and you’ll probably get a very good response.
piggy有事哦~~有事call我~(≧▽≦)/~啦啦啦 » Blog Archive » Help for homeowners on February 19, 2009 1:51 am
[...] up to 7 to 9 million families restructure or refinance their mortgages to avoid foreclosure. Read More|||Today, President Barack Obama announced a new US government plan designed to help Americans who [...]
喇遗撒，伯尼塔..layisa » Blog Archive » Help for homeowners on February 19, 2009 6:24 am
[...] up to 7 to 9 million families restructure or refinance their mortgages to avoid foreclosure. Read More|||Today, President Barack Obama announced a new US government plan designed to help Americans who [...]
Refinancing Requests Surge after Obama Announces Housing Plan | Zillow® Blog on February 19, 2009 1:03 pm
[...] President Obama announced his housing plan which, in part, aims to help homeowners who are current on their mortgage payments to take [...]
Homeowner Affordability and Stability Plan: One Is The Magic Number | Mortgages Unzipped on February 19, 2009 8:31 pm
[...] President Obama announced his Homeowner Affordability and Stability plan and people are saying it could help 7-9 million homeowners. That is quite a few [...]
Refinance Loan Requests Pouring in to Zillow Mortgage Marketplace | Mortgages Unzipped on February 19, 2009 8:57 pm
[...] President Obama announced his housing plan which, in part, aims to help homeowners who are current on their mortgage payments to take [...]
New — A Home Values Widget | Zillow® Blog on February 20, 2009 10:52 am
[...] seems home values are on everyone’s mind right now — partly due to Obama’s Housing Plan and the fact that mortgage rates are low and refinance activity is skyrocketing. Consumers are [...]
jeff on February 20, 2009 4:58 pm
how about people that got scammed by loan mod experts and still got foreclosed. Who’s going to help them?
Elod on February 21, 2009 11:15 am
Sam great question, I too would like to now the answer. I purchased my home in 2004 for 477,000 the same house around the corner from me sold for 335,000
my brothers on the same street paid 550,000 for his it now on sale for 260,000 let’s not forget the property taxes….
Paul - Las Vegas Real Estate on February 21, 2009 10:43 pm
—-
“And, Wall Street seemed to like the mortgage relief plan as stocks went higher today.”
—-
The Dow was up 9 Points for the day when it was announced…
……and then went Down over 300 points for the next two days as it was analyzed…
I don’t think Wall Street Likes it.
W and Laura Bush Arrive for Life in Dallas | Zillow® Blog on February 23, 2009 10:46 am
[...] Friday, while the rest of the country was focused on President Obama’s housing plan, former President George W. Bush and his wife, Laura, quietly slipped into their new digs at 10141 [...]
Veronica moore on February 23, 2009 11:18 am
I’m a homeowner and would like to kno how I could qualify for homeowners relief program
Conforming Loan Limits for Mortgages Return to $729,750 | Zillow® Blog on February 23, 2009 1:13 pm
[...] announced: As part of the President Obama’s housing plan (the American Recovery and Reinvestment Act), the maximum amount for conforming loan limits for [...]
Conforming Loan Limits for Certain High-Cost Areas Returns to $729,750 | Mortgages Unzipped on February 23, 2009 4:18 pm
[...] announced: As part of the President Obama’s housing plan (the American Recovery and Reinvestment Act), the maximum amount for conforming loan limits for [...]
Karen on February 23, 2009 7:04 pm
You have got to be kidding. I’m all about helping people who are in over their heads for what ever reason. Life happens and sometime bad times fall on good people. I get it. But what about a simple solution: Lower and fix the interest rate and extend the life of the loan. Example: So, you bought a house with a 30 year adjustable rate of say 4.5%. The rate moved, and probably very quickly up to say 7% and climbing. Now all of a sudden you can no longer afford the monthly payments, who could?. So, why can’t the banks refinance the loans to say 5% fixed for more than 30 years. Maybe 35 or 40 years will put the payment back in reach. This is not as complicated as it appears if everyone works with the same goal in mind. The banks might not WANT to do this, but too bad. They are a big part of the reason we are where we are, they don’t get to say no. Their hands can be forced, and it should, after the big bail out they happily took. Plus, if any modifications are made it only seems fair that if someone sells the property after accepting the dollars to help them stay, then the difference they received MUST be returned to the Federal Government.
Paul - Las Vegas Real Estate on February 23, 2009 8:07 pm
2/23/2009
DOW closes down another 250 Points. I think it’s safe to say that Wall Street certainly does not like the plan.
Everytime the Government comes up with a “plan”… it just seems to make things worse.
Do You Qualify for a Refinance Loan Under the Obama Plan? | Mortgages Unzipped on February 24, 2009 11:32 pm
[...] details of President Obama’s housing plan won’t roll out until March 4, we thought we’d review what we know so far about [...]
Ditech Home Loans on March 2, 2009 11:45 am
Is it still called refinancing if the existing lender is required to write down part of the principal balance? It sounds more like modification.
Jim on March 5, 2009 8:55 am
I was having trouble finding details but I was able to determine eligibility and see what I could get under the plan here:
http://www.homeaffordplan.com
Randy on March 18, 2009 7:46 pm
Loan Modification companies are a rip-off…read this article and pass the word.
http://www.studyhallnotes.com/?p=991
Mike on April 4, 2009 8:41 am
I just completed a 10 month repayment plan with Chase mortgage to keep my loan from foreclosure which involved my payments tripling during that period of time.The last 3 months my payments have gone back down to “normal” but during this whole period of time I’ve received no monthly statement, no letter of standing - nothing from Chase except a notice that my interest rate will go down effective with my May 1st payment. Then on Tues. of this week I received a certified letter that I’m in foreclosure! During all those months of repayment, apparently additional inspections and lawyer fees were taken straight out of the payments I understood to be going directly to my loan repayment plan. What do I do now? How do I qualify for help under Pres. Obama’s plan. There’s news of this plan all over the TV and the web but nowhere does it tell how to actually get this assistance and if anybody needs, man I sure do! Any suggestions?
Christina Ramos on April 13, 2009 3:27 pm
This will only work if OBAMA makes his appraisers go out to the house and actually do a true appraisal. No one will qualify unless they are given fair value for their land and their improvements on it. We applied for a refinance. We are in San leandro Ca and we bought our home 3 years ago for 680, 000 since then we have addeded an inlaw unit that cost 120,000 to build yet the homes in the area have less land and no detached units have sold for 4oo,000 so they wont even send someone out to do the Math. It is unfair that the appraisal values are dependent on forclosures and short sales… good luck.. We did everything we were suppose to 15% down.. thats 150,000 and we can’t even get someone to come to the house.
Chris Wilson on June 4, 2009 10:44 am
The Obama plan also known as Home Affordable Modification Program, is the strongest modification out there in the industry today. It takes you down to 31% DTI and fixes your payment at the lowest 2% for five years. After this five year period, the rate adjusts up to 1% each subsequent year after until it caps out at the market rate when you sign the new terms of the loan. If you qualify, it looks to substantially decrease your payment and benefit from today’s low rates. Only lenders that took TARP money must particiapate in this program. Check out propublica.com to see if your lender has taken govermnment money. You may be eligible.
However, your lender will only give you one chance at qualifying. Once disqualified, you have had your chance at this opportunity. Be careful what information you give to your lender. They are actively seeking our borrowers and trying to DQ them from this program. It makes sense because they stand to lose a significant amount of interest over the life of the new loan. The gove link is actually makinghomeaffordable.gov.
Check out loanmodifcationmadesimple.com They have a fair amount of information and also provide borrowers with free consultations. As a homeowner, your main priority is to keep your home, take advantage of this opportunity, and turn the tables on your lender. This can only honeslty be realized thorugh froced modification represented by attorneys. Thats the bottomline. Take care and good luck!
Latisha Manzanares on July 5, 2009 9:15 pm
My family and I sure could use some help too, we fell behind while my husband was disabled. We are on a repayment plan too, and with that repayment it jumped my payment from 862.00 to 1264.00. How is that suppost to help a family keep their home? Anyway, if there is anyone out there that can help us, please let me know.
marvin on July 12, 2009 7:05 pm
There are still lots of billion of dollars left from the $700 billion bank bailout, and, according to news, there could be a debate in congress on how the remaining money be dealt with. IMO, the bailout plan somehow help some companies but there are still lots of them who are under crisis. I just hope that the remaining fund will be used wisely to lessen the economic crisis.
yenow on July 29, 2009 11:47 pm
Any news update about this one?
100 Mortgage on August 14, 2009 9:28 am
That is really cool, the UK has so far managed… 15, lets get it moving too!
Quadiedra Burnett on November 13, 2009 7:52 am
I have been begging my mortgage for help for months now.I have fall behind in my payment because my mother have move out the house with me. My hour has been cut on my job.CHASE CORP.Refuse to help me any more. I have file several modification forms.I was approve for in Feberary of 2009 but when my income change I need little help.They will not help with my loan again. Now I’m they are talking about foreclose my loan.I have two children and no where to go.PLEASE HELP ME.
Frank on January 15, 2010 8:43 am
Your lender will merely offer you one opportunity to qualify. Once disqualified, you have had your chance at this opportunity. Be mindful of what info you offer your lender.