Ro Troia

Aid Coming to 9 Million Homeowners

A 75 billion $ plan is in the works that would subsidize rates and insure servicers against falling home prices.   How will this work, well  supposedly, the plan will make it easier for homeowners to modify their current mortgage to make monthly payments affordable.  Obama’s bill is focusing on homeowners who are current on the mortgage but at the risk of default.   He also plans to put billions of federal funds to entice loan servicers to modify the loans for the homeowners who have stopped paying.   

The proposed program would give loan servicers $1,000 for each modified loan and another $1,000 each year for 3 years only if the borrower stays current.  The bill would also give $500 to servicers and $1,500 to mortgage holders if they modify the loans at risk before the homeowner falls behind in payments.

Another feature is to modify the current Bankruptcy laws which would allow judges to order and make the loan modifications.

Here are some of the highlights of the plan:

1. Helping borrowers who owe more than 80% of their home value helping them refinance to make monthly payments affordable.
2. Creating a $75 billion homeowner initiative that would reduce monthly payments for at-risk borrowers by subsidizing the interest rate.  The goal is to be within 31% of borrowers income.
3. Providing incentives to loan servicers to modify loans and help at-risk borrowers while they are still current.
4. Creating a $10 billion bill to protect investors against falling home prices.
5. Require all financial institutions who receive government funds participate in a standardized loan modification program, while also requiring that all federal agencies that own or guarantee loans also apply the guidelines.
6. Allow judges to modify mortgages during bankruptcy
7. Provide more Treasury Department backing of Fannie Mae and Freddie Mac and expanding the number of mortgages that the government backs.

The source for this post comes from Coldwell Banker Morgage.

Tags: Tags: 75 billion plan, aid to homeowners, at risk borrowers, bankruptcy judge, help for default loans, homeowner aid, loan servicers, modify mortgages, obama plan, plan to help borrowers

This entry was posted on Wednesday, February 18th, 2009 at 1:44 pm and is filed under Buyer's Corner, Colorado Round Up, Market Conditions, Trends. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

1. Joshua Dorkin @ BiggerPockets.com said at February 19th, 2009 at 9:48 pm

   Ro – Don’t forget the $200 Billion on top of the $75 billion in the President’s plan, set to go to Fannie and Freddie according to Obama. We’re talking about a whopping $275 billion!

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