1.  $4-5M Freddie Mac&Fannie Mae loan holders :

-Refinance at lower rates
-Borrowers with higher loan rates that may be underwater can refinance

2. Lenders work with borrowers to modify terms of sub-prime loans that are at risk of default and foreclosure:

-Establish clear guidelines for mortgage industry that will encourage lenders to modify mortgages on primary residences.
-Reduced payments must be no more than 31% of homeowner’s income

3.  Keeping mortgage rates low for millions of middle-class families looking to secure new mortgages:

-Treasury and Federal Reserve will to purchase Fannie Mae and Freddie Mac mortgage-backed securities to ensure stability and liquidity.
-Treasury will provide up to $200 billion in capital to ensuring Fannie Mae and Freddie Mac to continue to stabilize markets and hold mortgage rates down.

4. Wide range of reforms to help families stay in home:

-Judges can reduce home mortgages on primary residences to their fair market value, as long as borrowers pay their debts accordingly.
-Award $2 billion in competitive grants to communities bringing people together and testing new and innovative ways to prevent foreclosures.

Restrictions of Obama’s homeowner affordability and stability plan:

-Loans must be from on or before January 1, 2009, and can be modified through December 31, 2012 only once.
-First-lien loans on owner-occupied properties with unpaid principal balance up to $729,750 for a conforming loan. -Borrowers must fully document income, two most recent pay stubs, most recent tax return, and sign an affidavit of financial hardship.

How it works:

-Three step relief plan for qualifying home owners:

1. Reduce the interest rate (rate floor of 2%).
2. Extend the term or amortization of the loan up to a maximum of 40 years, if necessary.
3. Forbearing principal (principal forgiveness or a Hope for Homeowners refinancing are acceptable alternatives), if necessary.

-Loan servicers will be required to use a net present value (NPV) test on each loan that is at risk of imminent default or at least 60 days delinquent.

-Servicers will follow a specified sequence of steps in order to reduce the monthly payment to no more than 31% of gross monthly income; monthly payment includes principal, interest, taxes, insurance, flood insurance, HOA fees.

-Homeowners are eligible for up to $1,000 of principal reduction payments each year for up to five years who make their payments on time.

The administration also has created the new Making Home Affordable page.  In this section, the administration talks directly to consumers and offers advice to the 7-9 million homeowners who may be eligible for mortgage assistance.  The site offers great self-assessment tools to answer the question whether or not you qualify for  mortgage relief.

A  new phone number has been announced for homeowers needing urgent assistance – the Homeowner’s HOPE Hotline for urgent help at (888) 995-HOPE.  More details are available at www.financialstability.gov.

Call us toll free at 866-495-3566 to obain more information.

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According to the National Association of Realtors, the tax credit should generate about 500,000 more home sales this year, whether they’re moving out or possibly moving to a bigger house.

The tax credit should also help generate more economic stimulation. Realtors’ forecast additional spending of about $60,000 for every house sold, triggering a “ripple effect” or other purchases and payments, such as furnishings, appliances, remodeling, repairs, real estate commissions, moving expenses, and similar costs.

The stimulus package also has even more incentives and benefits for home owners. Everything  from energy efficient heating and air conditioning, windows, doors, and insulation will apply towards the tax credits and will be extended  through 2010

Of course, another program in the package should also help generate an economic effect within neighborhoods that have numerous foreclosures.

This bill provides up to two billion dollars to buy, renovate, and rent out or resell  foreclosed and vacant homes.

The money generated will go to the local governments, however the actual rehabilitation, rental and resales work will go to people in the private sector.

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