Housing Rescue Plan Details

The Obama administration today spelled out details of a plan that would pay lenders to refinance or lower monthly payments on mortgages for homeowners who qualify.  This program is designed to help up to 9 million homeowners stay in their homes.  The plan is in response to the slump in home prices that began in 2007 and has led to massive foreclosures nationwide and is the root of the worst economic crisis since the Great Depression.

MSNBC reports that Treasury Secretary Timothy Geithner says.  "It is imperative that we continue to move with speed to help make housing more affordable and help arrest the damaging spiral in our housing markets."  Geithner provided many details of the plan which was originally announced on February 18.  For borrowers who qualify, their interest rates could drop as low as 2% or their loan could be extended for as much as 40 years.  The lender has the option to forebear principle for borrowers whose homes are worth less than their loan amounts.  The program aims to reduce monthly payments to no more than 31% of the borrower's gross monthly income.  In order to qualify for financial incentives of as much as $4500 to modify a loan, mortgage servicers will have to agree to follow strict guidelines established by the Treasury Department, according to MSNBC.  Other details include guidelines that only allow borrowers to have their loans modified once and the program only applies to first lien loans made on January 1, 2009 or earlier.  Some of the details are still in the process of being ironed out and treasury officials indicate that the program will only be available to responsible homeowners who did not buy more home than they can afford. 

As final program details are announced, we will be posting them here.  If you or someone you know is in need of loan modification, or is considering selling their property, especially in a short sale situation, please contact us, we can help.

 

by Brian Leavitt, a Licensed Real Estate Broker and Licensed Mortgage Broker representing Northstone Real Estate Inc, and Northstone Mortgage.

Brian serves clients within the Northwest Multiple Listing Service.

You can contact Brian directly by phone at 800-806-3145 or by email at brian@northstone.net. Click here to view his client newsletter.

Brian is licensed with the Washington State Department of Licensing and the Washington State Department of Financial Institutions License number 510-MB-19802 and is a member of the Seattle King County Association of Realtors and Northwest Multiple Listing Service.