However, the Homeowner Affordability and Stability plans--due to go into affect this month--aims to assist those very people who are struggling to make their payments but are in need of help. It consists of three key sections and is aimed at helping those who have “played by the rules and acted responsibly,” but are stuck in high interest mortgage or at risk of foreclosure.
In brief, the plan offers:
1.) Refinancing for up to 4 to 5 million responsible homeowners to make their mortgages more affordable.
2.) A $75 billion homeowner stability initiative to reach up to 3 to 4 million at-risk homeowners.
3.) Supporting low mortgage rates by strengthening confidence in Fannie Mae and Freddie Mac.
The first part will help homeowners by making low-cost refi's more accessible to those who have seen their home values fall over the past few years. This should help out those who no long have the 20% worth of equity in their homes required to get the current low interest rates.
The second aims to assist primarily those homeowners whose mortgage payments have exceeded their monthly income. Simply put, so many have seen their debt to income ratios get knocked way out of balance due to unemployment or rising tax or loan costs. The idea is for lenders and government to share the expense of lowering monthly mortgage payments to no more than 31% of a homeowner’s after-tax income.
The third part will allow for increased accessibility of affordable mortgages by financial aid for government-backed loans through Fannie Mae and Freddie Mac.
Further information about this plan can be found at the US Treasury Website.
These are confusion and anxious times for homeowners. Don't hesitate to contact me if you have further questions about how this plan may be able to help you.
