On February 18, 2009, President Obama announced a comprehensive plan to help
responsible homeowners avoid foreclosure by providing affordable and sustainable
mortgage loans. The Homeowner Affordability and Stability Plan, a $75 billion
dollar federal program, provides for a sweeping loan modification program
targeted at borrowers who are at risk of foreclosure because their incomes are
not sufficient to make their mortgage payments. It also includes refinancing
opportunities for borrowers who are current on their mortgage payments but have
been unable to refinance because their homes have decreased in value.
Loan Modification
Under the Homeowner Stability Initiative, Treasury will spend up to $50
billion dollars to make mortgage payments affordable and sustainable for
middle-income American families that are at risk of foreclosure. Borrowers who
are delinquent on the mortgage for their primary residence and borrowers who,
due to a loss of income or increase in expenses, are struggling to keep their
payments current may be eligible for a loan modification.
Treasury, the Department of Housing and Urban Development (HUD) and other
federal agencies are working with lenders and nonprofit housing counselors to
put all the systems in place to implement this massive program by March 4, 2009.
In the meantime, borrowers can get additional information at www.financialstability.gov. This
site includes questions and answers that will help homeowners determine if they
are eligible for modification assistance.
There is no fee to borrowers for assistance through the Homeowner Stability
Initiative. Consumers should be wary of any organization that attempts to charge
a fee for housing counseling or modification of a delinquent loan, especially if
it asks for money in advance.
Borrowers who are delinquent and have not yet been in contact with their
lender should call their servicer or a HUD-approved housing counselor
immediately, whether or not they believe they are eligible for the Homeowner
Stability Initiative. The Financial Stability website provides links to
HUD-approved housing counselors and lists phone numbers for most lenders.
Refinancing
Under the Homeowner Affordability and Stability Plan, borrowers who are
current on their mortgage but have been unable to refinance because their house
has decreased in value may now have the opportunity to refinance into a 30-year,
fixed-rate loan. Through the program, Fannie Mae and Freddie Mac will allow the
refinancing of mortgage loans that they hold in their portfolios or that they
guarantee in their own mortgage-backed securities. Lenders will be able to begin
accepting refinancing applications on March 4, 2009. To determine if your loan
is owned or has been securitized by Fannie Mae or Freddie Mac and is eligible
for refinancing, you should contact your mortgage lender after March 4.
In the meantime, borrowers can get additional information at www.financialstability.gov. This
site includes questions and answers that will help homeowners determine if they
are eligible for refinancing assistance.
Borrowers should be wary of any organization that attempts to charge a fee
for housing counseling or "assistance" in finding a lender that will refinance
mortgages under the Homeowner Affordability and Stability Plan, especially if it
asks for money in advance.
