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Is The New Mortgage Foreclosure Plan The Answer?

By Eric Goodwill

Is the new mortgage foreclosure plan the answer?  Read here to find out if you can benefit from Obama’s new plan!

Due to aggressive mortgages which were given out by lenders during the housing bubble, many borrowers are now experiencing adjustable rate mortgages that create unaffordable housing payments.  Because of this, many homeowners are falling behind on payments and facing foreclosure.  Luckily, the federal government has decided to step in and attempt to assist homeowners and solve the housing crisis.  The new mortgage foreclosure plan has various aspects which could be the answer to anyone’s mortgage troubles.

Affordability

One aspect of the new mortgage foreclosure plan which could be the answer to your mortgage and financial trouble is the affordability aspect.  Presently, mortgage interest rates are at all time lows.  Unfortunately, because of falling home prices across the country, many mortgage borrowers no longer have enough equity in their homes to refinance their mortgage.  While many lenders traditionally required between 10% and 20% equity to refinance a mortgage, Obama’s new plan could help mortgage borrowers refinance even if they have less than 10% equity.  Obama’s plan is geared to help up to 5 million homeowners who have been on time with their mortgage payments and have a mortgage which is presently owned by Freddie Mac or Fannie May.  By being able to refinance you mortgage, you could save thousands of dollar in interest each year.

Stability

Another aspect of the new mortgage foreclosure plan which could be the answer to your mortgage and financial trouble is the stability aspect.  The stability aspect of Obama’s new mortgage planned is geared to help distressed mortgage borrowers stay in their homes.  Because of adjustable interest rate mortgages, many borrowers have seen their mortgage payments increase to over 50% of their monthly income.  The goal of the program is to entice lenders to decrease interest rates so a borrower does not spend more than 31% of their monthly gross income on their mortgage.  Loan services will receive an incentive fee of up to $1,000 per year for three years for successfully refinancing a mortgage into a more affordable payment.  The same program will offer an incentive to borrowers of up to $1,000 per year for five years if they stay current on their payments.  This program could save distressed homeowners hundreds of dollars each month in interest payments.

Supporting Freddie Mac and Fannie Mae

The last aspect of the new mortgage foreclosure plan which could be the answer to your mortgage and financial trouble is the supporting Freddie Mac and Fannie Mae.  Under this section of the plan, the treasury department will purchase $200 billion of preferred stock in both Freddie Mac and Fannie Mae.  By doing this, Freddie Mac and Fannie Mae will be able to keep mortgage interest rates lower, which in turn will make housing more affordable for all Americans.  After making the initial investment, the Treasure Department will continue to show confidence in Freddie Mac and Fannie Mae by purchasing additional mortgage backed securities.

Related posts:

1. What Is Obama’s Mortgage Modification Plan?
2. How Can I Stop A Foreclosure On My Mortgage?
3. What Is The Early Mortgage Payoff Plan?
4. What Is A Non-Conforming Mortgage?
5. What Is A Mortgage Swap?