Some help for SOME borrowers in the new Housing Plan...

From the Desk of Strategic Mortgage...

Last week President Obama unveiled a housing plan, that is suppoed to target up to 9 million borrowers, here is some of what we know is on the table and who it will help.

The new $75 billion plan basically has to two basic solutions:

 

First, the government is aiming to help more homeowners refinance to take advantage of new low interest rates.

 

Second, it provides incentives to lenders and servicers to restructure mortgages to more affordable levels.

 

The official guidelines won't be unveiled until March 4, but here's how to know whether you'll likely be able to take advantage of either of these options.

 

Homeowners looking to refinance
The first part of the program targets borrowers who have kept current on their mortgages. Many of the homeowners in this group have been unable to lower their housing costs through refinancings because of falling home prices.

 

Currently, if you're underwater on your mortgage, owing more than the home's market value, you will not qualify for a refinance. However, the new guidelines in this program should help some of underwater borrowers. Homeowners who owe up to 105% of the value of their home will be eligibile to refinance with the new program. In addition, there will be no prepayment penalties and perhaps even no mortgage insurance. But the current loan must be owned or backed by Fannie Mae or Freddie Mac.

 

Borrowers Helped By New Program
·Haven't fallen behind on their monthly payments.
·Owe more than 80 percent of their homes' currently appraised value.
·Owe no more than 105 percent of the currently appraised value.
·Have mortgages that are owned or guaranteed by Fannie or Freddie.

 

Borrowers Not Helped By New Program
·Have fallen behind on their monthly payments.
·Have Jumbo Mortgages
·Owe more than 105 percent of the currently appraised value.
·Have mortgages that are not owned or guaranteed by Fannie or Freddie.

 

Mortgage modification

The second part of the plan addresses homeowners in default or at risk of default. Allowing them to qualify for loan modifications, which restructure the terms of loans.
Anyone with high combined mortgage debt compared to income or who is underwater may be eligible for a loan modification.

Borrowers with high levels of other debt, such as car loans and credit card debt exceeding 55% of their incomes, may still qualify for a modification but they'll be required to accept debt counseling in a HUD-certified program.
If borrowers qualify, their servicer or lender will reduce their monthly mortgage payments to 31% of their gross income.

The payment would stay there for five years and then gradually revert back to the conforming loan rates in place at the time.

The reduction would come mostly through interest-rate reductions, though in some cases, principal reduction also would be an option.

Borrowers would also receive incentive bonuses of up to $1,000 a year for five years for making payments on time.

Borrowers Helped By New Program
·At risk borrowers who have or are close to defaulting on loan.
·Owner Occupied home loans.
·Homeowners who have jobs and steady incomes.

Borrowers Not Helped By New Program
·Investors who have loans not on a primary residence.
·Modifications that will cost more than foreclosure
·Homeowners who do not have any or little income